The reason given is that, "political conditions are not right for presenting the tax reforms to congress".
Guatemalan president, Álvaro Colom, had announced that he would present a fiscal reform bill in the first quarter of this year. However, he has since said that political conditions are not favorable for going through with the reforms.
"Though the details of the reform were never revealed, source close to the government were promoting specific taxes for telecommunications and tax exemptions for other sectors," writes Jessica Gramajo for Elperiodico.com.gt. Tax on income was also believed to be under review, as well as certain import duties.
A new attempt is being made by the Álvaro Colom government to increase tax collection by enforcing the so-called 'Anti-evasion Law'.
The bill contains administrative measures to improve control over and auditing of existing taxes as well as standardize aspects that seek to combat tax and customs fraud and smuggling, according to a communication from the Finance Ministry.
The mission established that performance criteria was broadly met and significant progress was made on structural reforms.
The mission noted that all quantitative performance criteria for December 2010 were observed with ample margins, and that there have been significant advances in structural reforms. For 2011, the mission and the authorities reached understandings on the appropriate economic policies to support the economic recovery and reinforce macroeconomic stability. These understandings are subject to approval by the IMF’s Management and Executive Board, which is envisaged in late-April.
Government revenue during January 2011 totaled $ 332.8 million, $ 37.6 million more than the same period of 2010.
Tax revenues reached $ 264.5 million, an increase of $ 52.5 million (24.8%) over January 2010.
Regarding indirect taxes, revenue was $ 169.5 million, a net increase of $ 52.8 million (45%) over the same month last year.
The highest growth compared to January 2010 was recorded in the Personal Property Tax and Services (ITBMS) and the selective consumption tax, said Finance Vice Minister Dulcidio De La Guardia.
The Superintendence of Tax Administration (SAT) estimates that $ 449 million is owed in taxes and $ 256 million in penalties and interest.
However, it clarified that the SAT estimates viable to recover only 10% of that amount, about $ 45 million, through a partial exemption declared by President Alvaro Colom.
The waiver, implemented through the 1946-2011 government decree, grants a 95% exemption for taxpayers who pay their back taxes before March 31, 90% if done in April, 85% between May and June and 75% if between July and August.
The state loses about $ 2.202 million in taxes, equivalent to 5.8% of the GDP.
Weekly publication El Financiero analyzed the main reasons why taxpayers are failing to pay taxes, stressing the evasion of the sales and income taxes.
According to the study, fraud in these 2 types of taxes implies $ 1.988 million per year, about 5.2% of GDP, money which does not go to the National Treasury.
The Finance Ministry asked for two changes to the tax evasion bill being discussed in Congress.
The Ministry's request to Congress includes more controls when issuing special invoices for agricultural producers, the elimination of tax credit for small taxpayers and reestablishing the tobacco tax.
Prensalibre.com printed comments from Deputy Finance Minister Marco Livio Diaz, "...
There is urgent need to strengthen the Superintendence of Tax Administration (SAT) with audit and control instruments.
Tax evasion reached $ 2,500 million, and businessmen insist that before a tax reform is passed, increasing tax burden and affecting competitiveness in the country, it is required "to improve the fight against tax evasion and customs smuggling."
Summary of the legal tax reform aiming at increasing tax revenue by $ 1.000 million, or 2.5% of GDP.
The so-called Solidarity Tax Bill was presented yesterday to the Legislature by the Executive Branch.
The initiative seeks to increase tax revenues by 2.5% of gross domestic product (GDP) which, coupled with the implementation of measures to increase revenue and reduce spending, would balance the public budget.
The project includes sharp increases in consumption taxes and cutting public spending.
The government plans to introduce the fiscal adjustment plan to the National Assembly over the course of the week.
"The adjustment plan, though the term has been carefully avoided by the president Laura Chinchilla, has as focal point an increase in Sales Tax from 13 to 15%, extending it to services such as private health and education as wells as reducing exempted goods from 300 to only 50," reports an article in AFP.
The sum amounts to the 5% tax collected from the sale of shares from BAC to AVAL Group and from Industrias Lacteas to Coca-Cola FEMSA.
An extraordinary income of approximately $ 105 million could be received by the Panamanian government from the sale of shares of the two large firms. These funds would pay the initial installment of the Metro line.
"The performance of public finances until September was in line with the program negotiated with the government," concluded the IMF mission.
An IMF team held meetings with the economic cabinet, other policymakers and private sector representatives from November 29 until December 3. The team reviewed the short-term economic prospects and macroeconomic projections are now focusing on implementing the government's fiscal program.
More government spending -> more debt -> more expensive credit and more taxes. The State continues to fatten at the expense of the productive sector.
Juan Carlos Hidalgo, in his blog at Elfinanciero.com, begins his article calling the 2011 budget approved by the Legislative Assembly as “illegal”. He explains that current expenditures are included as investments, which is specifically prohibited by the National Budget Law.