Challenge to cig tax cuts

PANAMA. The reduction of proposed new government taxes on cigarettes from 60 percent to 50 percent is causing some consternation among anti-smoking groups who were hoping to see the original fiscal amendment bill go through unchanged.

Nelida Glygo of the Panamanian Coalition against Tobacco said the 50 percent tax is absurdly low. She said that the annual cost of treating cancer and tobacco related diseases adds up to $90 million and that the tobacco industry only pays $11 million per year in taxes. She said that the proposed price hike to $2.90 would not increase the cost of a packet of cigarettes sufficiently to persuade people not to buy them.

“We have struggled so many years to get a law like this passed that we’re not going to let these people (the government) impose a tax law that is not fair,” she said.

According to legislator Alcibiades Vasquez Velasquez, the 10 percent reduction may have been made after lobbying by the tobacco industry which held several lengthy meetings with the government to express their concerns about the effects of the tax hike on their companies.

Vasquez says that legislators opposed to the amendments have three options open to revise the tax plans. They can veto the 50 percent proposal; they can present an alternative proposal to increase the cost of cigarettes to at least $3 a box; or they can wait and try to push through a further tax increase in the next round of fiscal reform in October.

He said that he and legislator Jose Isabel Blandon were planning to present a proposal to extend the ban on smoking in public places to include outdoor areas.

Legislator Leandro Avila said that 70 percent of the proposed tax reforms had been watered down. He said that his original proposal had been to increase the cost of cigarettes to $5.85 a packet but that idea was shot down.