Panama’s unicameral legislature on Monday approved a major fiscal reform package that seeks to raise revenues from new business taxes, in a bid to reduce the country’s level of debt.
The legislature voted 46 to 28 in favour of the measures, which will include a new 1.4% tax on companies’ gross revenues, and a levy on firms operating in the Colon Free Trade Zone – the largest free port in the Americas.
Welcoming the latest development, Finance Minister Ricaurte Vasquez argued that the fiscal reform package will "stabilize Panama's public finances and establish conditions for the economic and social growth of the country”.
President Martin Torrijos hopes that the new measures will reduce Panama’s $700 million budget deficit, equal to 5.2% of GDP in 2004. He is also hopeful that the extra revenues will help the government to reduce its sovereign debt and restore the confidence of international institutional investors.
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