Tax income rockets but deficit forecast
The increase in Panama sales and services tax from 5 t to 7 percent has sent government income rocketing.
In August, revenue from the tax jumped 51 percent, from $47.2 million to $71.2 million, as compared to August of last year.
The tax on imports rose 76.7 percent to $36.7 million. due to businesses importing more in goods in anticipation of strong retail sales.
For the year so far, state revenue is $2.76 billion, $384.3 million more than in 2009 at this point of the year.
In spite of the increased revenues, the government expects a budget deficit of 2.5 percent.
Meanwhile The National Assembly has approved on second reading the draft law establishing tax breaks for companies involved in the construction of the Metro.
The initiative is designed to allow contractors working on the project to avoid paying duty on materials and equipment they import, as well as avoiding other taxes.
The companies would still have to pay Social Security and insurance for their workers