Panama Election to Affect Taxes, Land, Growth

The Wall Street Journal reported this week that Ricardo Martinelli, who is the leading Presidential candidate at this time, has proposed a flat tax system if elected.

Flat tax is a system that uses a single, constant tax rate. Oftentimes, the system
is praised for eventually boosting the overall tax collection for a country. The flat tax rate would be between 12%-17% for individuals and 18%-22% for companies. Current corporate tax in Panama is 30% of profits. Panama would be the first Latin American nation to have a flat tax system, and Martinelli believes that the flat tax would “simplify the tax code because it will reduce the informal sector and tax evasion”, according to Frank De Lima, Martinelli’s head economic advisor.

Martinelli is an entrepreneur that owns supermarkets and other businesses. He served as Canal Minister in the early 2000s. Martinelli wants to run the Canal project like a private company and also wants to reduce the size of the government. Additionally, Martinelli wants to promote tourism within the country, claiming “We think we can make a big tourism hub in Panama where we have the Caribbean without hurricanes”.

Panama’s economy is expected to slow in 2009, but will still likely see growth of about 3%. Panama is also waiting for a Free Trade Agreement with the U.S. to be ratified by Congress. The Panamanian elections will be held on May 3rd, and Martinelli is leading his competitor, Balbina Herrera, by a 12% margin.

The new elections will have an impact on Panama’s growth and development. Interested in a flat tax system and relocating to Panama? Visit Panama-Land-for-Sale.com to view condos, businesses and land for sale in Panama!