Reformar la tributación para el desarrollo

Un análisis del sistema tributario panameño

Abstract

This working paper briefly discusses the most important aspects of the Panamanian tax system, with particular attention to the income tax and the Tax on Personal Property and Services Transfers (IT-BMS). Also, it suggests recommendations on how to simplify the system to strengthen its operation and increase revenues without raising tax rates. The sources of revenue of the government, while enjoying a healthy diversification, do suffer from tax volatility, especially in direct revenues. Two-thirds of tax revenues are deemed to be volatile. Moreover, with respect to indirect taxes, revenue is nine percentage points more volatile than national consumer spending, suggesting internal sources of revenue instability. This volatility is suggested as being caused by successive fiscal reforms since 2010. While revenue increased marginally, they injected a large dose of uncertainty in the tax system. Therefore, in order to simplify the national tax system to stimulate growth, the paper proposes: 1) to gradually prompt a transition of the current system focused on income to one of taxation around consumption, 2) accelerate the automation of payments to the Treasury online, and encourage the development of private initiatives for development of API software 3) merge the supplementary tax on dividends and on a marginal income tax payable by legal persons, and finally 4) eliminate tax expenditures that do not have clear objectives to reduce system complexity.