Varela Backtracks on Panama’s Proposed Fuel Tax

EspañolPanamanian President Juan Carlos Varela announced via Twitter on Sunday, February 8, that he will no longer look to pass a new tax on fuel to fund an increase in retiree pensions.

“I have ordered the Health minister to withdraw the bill so that the Executive can go on assessing alternatives.”

The proposed tax would have tacked on US$0.05 on every liter of fuel sold, and had been previously approved by the Cabinet Council.

“We won’t allow them to mock us,” said Eladio Fernández, a representative of the Association of Independent Retirees. According to Fernández, Varela could have used 2 percent of the revenue derived from the Panama Canal to increase pension funds, but the proposal ultimately failed because “the powerful opposed it.”

Varela’s initial decision to support the new tax sparked criticism among various private-sector groups. José Luis Ford, chair of the Chamber of Commerce, Industry, and Agriculture of Panama, said the tax would have caused a “chain reaction,” affecting prices on “everything that needs oil in order to be manufactured or transported.”

Dagmar de Álvarez, chairman of the Panamanian Business Association, called the measure “improvised.”

Former presidential candidate Juan Jované simiarly criticized Varela, questioning the current president’s ability to run the country. Jované said the president’s support for the tax showed he “lacks the capacity to understand the problems in the economy.”

“The administration’s problems begin now, since it now needs to find a source of funding to increase pensions for retirees, as [Varela] promised,” warned Jované.

Zulay Rodríguez, a deputy representing the Democratic Revolutionary Party, suggested on Saturday, February 7, via her Twitter account that the government establish a tax on foreign visitors to the country, in order to fulfill the president’s promise.

Fernández says Varela’s government will have until April to find a solution to the funding problem, or face demonstrations from his constituents.

Source: La Prensa.

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