Scandals, inequality loom large as Costa Rica votes for new leader

by Reuters
Sunday, 2 February 2014 18:45 GMT

A girl dressed in the colours of Costa Rica's national flag is pictured during a parade commemorating Costa Rica's Independence Day in San Jose September 15, 2013. REUTERS/Juan Carlos Ulate

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By Alexandra Alper and Zach Dyer

SAN JOSE, Feb 2 (Reuters) - As voters streamed to the polls on Sunday, Costa Rica's centrist ruling party front-runner hoped to fend off a leftist surge fueled by resentment over corruption scandals and rising inequality.

Centrist former San Jose Mayor Johnny Araya led polls on promises to reduce poverty, while distancing himself from President Laura Chinchilla's scandal-plagued government and painting rivals as radicals.

As he passed through a voting location on Sunday morning, Araya proclaimed his candidacy "the safest, most responsible option" for Central America's second-largest economy.

But voter anger over government corruption has buoyed a challenge from leftist lawmaker Jose Maria Villalta, who also promised to tackle inequality in the coffee-producing nation. If none of the thirteen candidates wins more than 40 percent of votes, as expected, there will be an run-off in April for only the second time in Costa Rican history.

"I see Araya as more of the same, a misfortune for this country after all the corruption of the past," said Maria Ines Martinez, 57, a businesswoman, lining up outside a high school to vote as polling stations opened on Sunday.

But other voters expressed concern that the main leftist challenger would take the country down an extreme path. Villalta's party "is a communist party" while most Costa Ricans "believe in freedom for businesses, private property," said financial planner Jose Conejo, 45, as he stood outside a voting center in the capital.

A winner will have to tackle growing debt that totals more than half of gross domestic product, as generous salaries and mandatory education spending weigh on a weak tax take. "If they don't do something, then this somewhat negative trend on the debt could continue and that could have an impact on the credit rating," said Joydeep Mukherji, a sovereign credit analyst with Standard & Poor's, which rates Costa Rica at BB with a stable outlook.

Villalta told Reuters on Saturday he would seek to address the problem by combating waste, tax evasion, and lightening a heavy burden on the middle class if he wins. "What we want is a progressive reform with greater tax fairness where those who have more pay more," he said.

A lawyer by training, Villalta, 36, cut his teeth organizing against the Central American Free Trade Agreement. He is the only member of his Broad Front party, formed in 2004, to serve in Congress during the 2010-2014 term.

But he proposed more than 100 bills, including one to strip high-level officials of immunity while in office.

That resonated with voters, after Chinchilla sparked outrage by accepting flights on a private jet, despite laws barring public officials from accepting sizeable gifts. National Liberation Party frontrunner Araya, 56, has vowed to tackle the deficit by limiting public sector bonuses, creating a capital gains tax and shifting to a value added tax.

Gaffes, such as underestimating the price of milk in an interview, have distanced Araya from equality-conscious voters, while the national prosecutor's probe of allegations of abuse of authority and embezzlement have also dampened his appeal.

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