3 March 2006
Free Trade Agreement with US Costs Panama $234 Million
A free trade agreement with the United States will cost Panama $234 million in lost revenue from import duties in the first four years, according to projections by the Ministry of Economy and Finance and international firms.
The Panamanian Chamber of Commerce had calculated the loss at $40 million in the first years, and is assuming that the government is gambling on higher economic activity and thus more tax income to offset the loss caused by a free trade agreement.
However, the Ministry says that with the tax reforms of last year the effects of a free trade agreement had already been taken into account. These tax reforms mean higher taxes for Panama’s middle class.
But the president of the College of Economists, Adolfo Quintero, predicts that these tax reforms will not be sufficient to fill the gap in state income a free trade agreement will produce.