Assembly to debate gasoline tax increase

The money will go to increase pensions for retirees.


The National Assembly is slated to debate a bill this week that will increase the gasoline tax by 5 cents a liter to pay for an increase to pensions for retirees.

The bill was submitted by Minister of Health Miguel Mayo. It has been widely rejected by civic and business groups.

President Juan Carlos Varela has defended the bill, saying the recent drop in fuel prices have afforded the country an opportunity to fund the pension increase without having a great impact on consumers. But others have argued that, if gas prices go up, consumers will be squeezed.

Friday, Varela said the measure could be rescinded in that case.

"If the price of oil goes up again, the redistribution of the tax savings has to disappear," he said.

Monday, several groups are expected to present alternative proposals. Representatives of several banks said they will argue that the measure should be temporary.

PRD Deputy Javier Ortega said he will ask Social Security, which runs the pension fund, to come up with an alternative that would not increase fuel prices. Both the PRD and the CD caucuses have rejected the increase.

If passed, the measure would generate an estimated $100 million a year. The cost of the pension increase is $80 million.



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