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PANAMA PRESIDENT MARTIN TORRIJOS'POPULARITY PITTED AGAINST POPULAR PROTEST ON TAX REFORMS.

Article Excerpt
Panama's President Martin Torrijos has introduced profound fiscal reforms aimed at boosting tax collection and reducing poverty, and he has called a special legislative session to deal with them. The measures, say economists, change the economic model of the country, and they have sparked fierce opposition across a broad swath of the nation's sectors.

As Minister of Economy and Finance Ricaurte Vazquez explained the motives of the changes, "In the Panamanian model, there is no correspondence between economic growth and the distribution of income, which generated unjustified inequalities, given the high level of national wealth." The reforms seek a 7% reduction in poverty over a four-year period.

Vasquez called it "inconceivable" that a country of 3 million people, with a GDP of more than US$14 billion, could have 40% of its population living in poverty. The bill the government has sent the congress was therefore titled the Ley de Equidad Fiscal (fair taxation law). It will undergo a difficult debate in the treasury committee of the legislature and is slated to emerge from committee in early February.

Long overdue, but no one felt obligated

Although Panama has not changed its tax policy in more than a decade, the...

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