People considering travel to Costa Rica are aware it is no longer an inexpensive country to visit. Prices for hotels, food and transpiration are much higher than in neighboring countries. At times some prices are even higher than in developed nations.
Causes for this are based on a triad of simple infrastructure obstacles. Electricity is triple the cost than in the United States and Europe. Gasoline cost per gallon is well above the US and European norms and overall taxes (sales, import, social security and income tax) rival only the wealthiest countries across the world.
In a more detailed comparison of the issues electricity is charged at .40 cents a kWh in Costa Rica. Averages across the United States are .07-.12 cents in US Dollars, while in Europe the average is between .05-.08 in Euros with Germany at 0.26 at the moment. Due to the import tax gasoline is upwards of $5.80 a per gallon compared to an average of $3.80 in the United States and Euro 3.90.
Taxes in Costa Rica are especially high overall. Import taxes for cars and car spare parts can amount to over 60% of the cost of the same vehicle in the United States. Social security averages the same rates as Europe at 32% but the sales tax is an exurbanite 13% and the income tax is at 30%. There are very few comparable higher tax structures in the developing world. Only local government taxes and land taxes remain low. Time is of the essence however to guarantee these inexpensive taxes because the municipalities of smaller areas have mismanaged incoming funds.
Sustainable goods (washing machines, refrigerators) and especially construction materials are imported with duties of 15-30% and then further burdened by the 13% sales tax. The free trade agreements have grace periods so it will take years to recoup the proposed benefits. Currently established import companies control the market and organize for the prices to remain high while the resell to the local hardware stores increase the item cost yet again.
Importing and shipping within Costa Rica is inefficient due to the outrageous cost of fuel, controlled market costs by a select few, and racketeering. Sea freight from Miami costs less than all the fees and transport necessities of one container land shipment from the port of Limon to Dominical.
The labor rate per hour is lower than in most developed nations but the efficiency can slacken and attention can lower up to 1/2 or 1/3 of qualified production labor in the United States and Europe. Social benefits, insurance, holiday and severance pay must be factored in for hourly wages of $5 to $6. Yet with the lackadaisical attitude and efficiency rate one laborer can take up to three times to complete a simple task causing a $6 dollar job to cost $18 dollars. Creating a labor price that exceeds minimum wage from California to Florida.
Obstructive official routine or procedures, time-consuming bureaucracy, and the complicated overall “Red tape” is on the increase in Costa Rica which translates into paperwork permits, multiple bank accounts, complicated taxes, necessity for lawyers, and the need to appease local municipalities.