No new taxes in Panama
President of Panama Promises “No New Taxes”
In a meeting with private sector representatives, President Varela said he will not establish new taxes over the next four years.
The president, Juan Carlos Varela, made a commitment to the business sector to not execute any reform to the tax code in the remaining years of his administration. In order to finance the Government Strategic Plan for 2019, which envisages an investment of $19 billion, he assured that the state will generate the necessary resources as it would be enough “… to put the house in order and not commit acts of corruption.”
Rafael Carles, representative of the Chamber of Commerce and Industry of Panama, told Laestrella.com.pa that “… These are very important words that fill us with hope and show a strategy which is different from the last five governments that used tax reforms to strengthen public finances. ”
Carles added “… I have it written down to keep a record of what was said and remind him of it if he forgets it and then wants to surprise us with these measures. ”
Comment: They do always promise as you perfectly know from your home country. As for now we already have two new taxes added in last few months in Panama. The pattern is that two types of promises are done by politicians: no taxes increase and new programs opened. That assures popularity. The result: new taxes are almost always added regardless to the rhetoric.
Panama is unfortunately (and maybe fortunately) pegged to US dollar. They do emit their own coins, but not paper dollars. So they are a little limited about how much their own currency they can print out to cover their expenses. Of course US dollar is losing on its value regardless of Panama, so Panama also inherits raising inflation. But it’s somehow limited and until they are using US dollars, they are OK. Other countries in the region used to do it in the past, then they introduced in printing their own domestic currency and it always ended the same way: huge inflation few years later.
So Panama is a little big lucky as far as they are pegged to US dollar.