Panama: Property Tax Cut Discussed

Panama: Property Tax Cut Discussed
stoy by La Prensa

Some cite the dropoff in new home sales necessitates a reduction in property taxes.

The Trade and Industry Chamber proposed reducing the property tax rate from 2.1 percent to 0.5 percent the first debate of fiscal adjustments at the Committee on Finance.

Chamber President Adolfo Linares argued that the country's tax rate is currently the highest in Latin America. He cited the average tax in other countries in the region, including Colombia (0.75 percent), Costa Rica (0.25 percent), Guatemala (0.56 percent), Mexico (.5 percent) and Venezuela (0.6 percent).

Director of Revenue Luis Cucalón qualified the proposal by arguing that business owners should not be entitled to exemptions and lower taxes. "It's either one or the other," he added.

However, he said that all proposals will be reviewed by a committee which is headed by Ministry of Economy and Finance.

The ministry currently raises $80 million in property tax revenue each year at the 2.1 percent rate, though the entity estimates the tax should generate about $300 million. Officials point to loopholes in land laws such as property divisions have allowed for millions of dollars in evaded taxes.

José McKenzie, president of the Association of Certified Public Accountants, believes that reducing property taxes could spell some relief for the sharp slowdown in the housing market.