Structural reform.

Position:SPECIAL LATIN TRADE SUPPLEMENT
 
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Panama is in good fiscal condition. Although the primary surplus has gradually decreased from a tremendous 7% of the GDP in 2007 to 1% in 2010. The country's primary position should improve as a result of recently passed tax reforms that will raise fiscal revenues above 25.3% of GDP level.

The first of the two phases of tax reform took effect last year. "It transferred the weight placed by fiscal policies on the middle classes to extremely strong sectors with high profit margins that were not paying enough taxes," according to Roberto Henriquez, Minister of Trade and Industry. Taxes were assessed on the aeronautics sector, casinos, the banking sector, tobacco industry, and a few in the Colon Free Zone.

The second phase went into effect in July 2010 with an increase in the consumption tax rate from 5 to 7%, while still remaining one of the lowest in the Americas. Foodstuffs, medicines, school supplies, and fuel are exempt under the new policy.

The government plans is using the additional revenue for social programs. One such program is the "100 for the 70s"...

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