Minister of Economy and Finance Dulcidio De La Guardia confirmed yesterday that this measure is expected to raise $100 million for the Social Security program that pays the pensions.
The government decided to increase the tax on gasoline due to the recent significant price decrease. The increase in pensions will benefit some 200,000 people, who will see increases from $20 to $55 a month.
The increase will be formalized through a draft law that was presented yesterday to the National Assembly. If passed, it would go into effect in April.
Economist Raúl Moreira said the move makes sense since it will not impact the majority of the population.
"It will also lead to a more rational use of vehicles," he said. "It will not be as noticeable as if it were a direct tax."
Giovani Fletcher, president of the Panamanian Institute of Rights of Consumers, said that they are evaluating the proposal. Once concern they have is that fuel prices could increase as much as they have decreased over a short time, which would be an extra burden on consumers. He would have liked to see a tax increase on other segments of the economy, such as gaming or entertainment.
The annual cost of the increase is $80 million. The remaining $20 million will be put into a reserve fund.
The program is facing a long-term crisis, as its $4.5 billion reserves are expected to be depleted by 2024. Officials said that the government needs a sustainable solution to reduce the gap between the benefits paid by the program and the amount it collects.