Although many developers have advertised 20 years of property tax holiday, the fact is that it applies to the properties improvement or construction and does not apply to the land. Right now property taxes would apply to properties valued at over $30,000. This minimum is to exempt rural homes and people of low incomes from paying a tax.
There has been a big push in the last administration and this one to get people who have rights of possession (ROP) land to title it. I can certainly see how many land holders would like to title their ROP land in order to possbly sell it. But if you have no intention of selling the land there is little advantage I can see to titleing. I have always believed this to be a way for the government to begin taxing land in outlying areas. They can't tax what they own. Most ROP land in the interior are larger farms that are used for agricultural purposes such as cattle raising. Although the cost per meter may be valued low, the size of the property could push it well over the $30,000 threshold. Most large titled farms are titled at a value of pennies per meter in order to stay below the minimum. The property of Valle Escondido is still on the registration books at 11 cents per meter. You can see that even large farms would fall under the minimum with these kinds of values. Once many of the ROP lands are titled the government may start to reassess all land in order to collect a tax on it.
This article points out that as much as $1.2 billion is owed in back property taxes and I would think this applies to those who have been notified and have just ignored paying. I have heard that this is the case in Panama City area especially.
Most income to governments around the world are derived from property tax. Although I do not like property tax in any form, I don't think many would object to a reasonable tax if those funds were used for actual improvements like street repair and other basics infrastructure maintenance. The challange in Panama will be in controlling who gets the money and how it is spent. The daily papers are full of stories of how various officials have found ways to steal from the government coffers. I am sure this will open up an even bigger temptation for graft and little of the funds will end up working towards the public good.
The Ministry of Economy and Finance will present a proposed revision to the methods that it currently uses to collect property taxes to the Cabinet Council this week.
"We are considering measures to achieve a more efficient collection of property tax," said Revenue Director Luis Cucalón, adding that this tax will be the primary source of revenue for municipalities once the law regarding decentralization is approved.
Current tax delinquencies range from $590 million to $1.2 billion, according to official data.
Tax authorities plan to strengthen their audit teams to minimize tax evasion. Authorities have also identified significant instances of tax evasion when vehicles are transferred to new owners.
The Department of Revenue plans to enact a measure that will require proof that sales tax has been paid before the new owner can register a vehicle.
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