Free zone will strike

PANAMA. Over two thousand businesses in the Colon Free Zone will close their doors on Wednesday September 2 to protest new government taxes, and their managers will go to the National assembly to stage a peaceful demonstration.

Giovanni Ferrari, president of the User's Association of the Panama Duty Free Zone (AU) said the measures the government wants to impose will affect the companies and provoke transnational businesses to leave the zone.

“We have been pushed to do this because the new tax impositions will harm employees and will increase the employment problem in the province”, he said.

The businessmen are supported by Colon Mayor, Damaso Garcia, who says the duty free zone needs to maintain its tax advantages to continue thriving.

According to a Free Zone report, 1,066 employees were dismissed from the 2,800 companies in the zone in the first six months of the year. The most affected sectors were textiles, cargo and sales.

The zone has 30,000 permanent workers plus an undetermined number of indirect and temporary posts, meaning that at least 90,000 jobs could be in danger.

The zone’s businessmen made a unanimous decision to make next Wednesday a day of reflection with a shut down of all companies.

The government is requesting the zone companies to up their tax payments by $100 million.

“ In 2008, the ZLC Duty Free Zone) earned $1.5 billion and only paid $62.9 million in taxes. The additional $100 million we are requesting is a minuscule fraction of what they generate” said Dulcidio De La Guardia, Finance Vice Minister.

The ZLC is exonerated from paying taxes on dividends earned.

De La Guardia said the coming changes will not hinder their competitiveness. “ Its just a matter of tributary justice, employees cannot bear all the tax weight, while important economic sectors are exonerated”.

The government intends to increase rents for ZLC user's. They currently pay between $0.25 and $1 a square meter monthly, producing a revenue of $22 million for the State. The Finance Ministry seeks to increase rent cost to generate a revenue of $60 million.