Panama Business and Travel has over 3,000 investment members in our organizational network of investors interested in news about Panama. PBT provides readers with journalistic in-depth coverage on the different businesses and aspects of the Panamanian economy. Educating our clients is of paramount importance to us; that is why we have prepared this short listicle of the different taxes that exist. Also, before we go on, a bit of a caveat: never forget to pay your taxes.
The Different Kinds of Taxes
- A property tax (or millage tax) is a levy on property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county or geographical region, or a municipality.
- A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate.
- A Pigovian tax (also spelled Pigouvian tax) is a tax levied on any market activity that generates negative externalities (costs not internalized in the market price). The tax is intended to correct an inefficient market outcome, and does so by being set equal to the social cost of the negative externalities.
- A land/location value tax (LVT), also called a site valuation tax, split rate tax, or site-value rating, is a levy on the unimproved value of land. It is an Ad valorem tax that, unlike property taxes, disregards the value of buildings, personal property and other improvements.
- A poll tax, also known as a head tax or capitation, is a tax of a uniform, fixed amount applied to an individual in accordance with the census (as opposed to a percentage of income, or any proxy for ability-to-pay). Head taxes were important sources of revenue for many governments from ancient times until the 19th century.
- A fixed tax is a lump sum tax that is not measured as a percentage of the tax base (income, wealth, or consumption). Fixed taxes like a poll tax or sin tax are often considered regressive, but could have progressive effects if applied to luxury goods and services.
- A sin tax is an excise tax specifically levied on certain goods deemed harmful to society, for example alcohol and tobacco, candies, drugs, soft drinks, fast foods, coffee, and gambling. However, these taxes have been criticized for burdening the poor and being part of a nanny state.
- A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. "Regressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, so that the average tax rate exceeds the marginal tax rate.
- An inheritance or estate tax is a tax paid by a person who inherits money or property or a levy on the estate (money and property) of a person who has died. For historical reasons, the term death duty is still used colloquially (though not legally) in the UK and some Commonwealth countries.
What About Value Management?
Of course, taxes are only one side of the story. Truth is, we need to do more than just pay our taxes – that is where value companies come in. Remember: pay your taxes and increase your value. That is how things go in this world. There are a lot of good value management companies out there; Value Management (Asia) Seoul comes to mind. Find the right one and get that value you so strongly deserve.