New municipal taxes threaten to drive up prices and hit consumers pockets

(Newsroompanama.com) The new Panama city taxes proposed by Mayor Bosco Vallarino and his advisors, will have some supermarkets paying 26 times more than they pay today.

That, market owners told La Estrella, will lead to a rapid increase in prices to consumers, and pass down the line to restaurants and other food outlets.

The municipal tax also extends to sales agents, who pay up to 15 more times convenience stores who quintuple their contributions to the municipal treasury.

An analysis by the Center for Economic Studies at the Chamber of Commerce argues that the way the new tax rates are calculated is not clear because the margins of different economic sectors are different.

The former municipal tax system, adopted in 2006, was based on sales revenue, while the latest municipal system introduced in December uses a percentage tax rate system.

The advisor and front man for the Mayor, Jose Isabel Blandon, said that the new tax tables consist of a flat rate for all companies pursuing the same activity.

Rafael Carles, director of the board of the Chamber of Commerce, called the changes "unwise, unfair and irresponsible" and the Chamber of Commerce and business associations are seeking their immediate repeal.

When the mayor met with the Chamber and other business associations recently, he got a hostile reception and left without taking time to answer questions.

Over 32 000 municipal taxpayers have been classified into more than 60 tables, which was established to calculate the rate of tax payable.

According to deputy and advisor Blandon, the new tax system will raise some $5 million additional dollars.

By 2010, the budget of the Mayor of Panama was $55 million for operations and $10.7 million investment For 2011 it is $60.8 million dollars for operations and $31.3 million dollars investment.

Figures show that the operating budget for the Mayor of Panama has increased by $5 million dollars for this year even though he  had garbage collection removed from his jurisdiction.

The study of the Chamber of Commerce concludes that drastic changes in the tax system will discourage investors and the private sector in general.

Earlier automobile dealers pushed the municipality to back down on their new car licensing structure, which was based on the purchase price of a car, and made no allowance for depreciation. The introduction of the plan, trumpeted by Blandon, was pushed back three months and it was restructured.

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Original Source: Newsroompanama

Date Retrieved: January 21, 2011.