On behalf of Karen Heck
After Brazil increased the tax on oil and derivatives, other Latin American countries are now considering an increase in their fuel taxes. The main argument is that final consumers would not suffer a large increase in fuel prices, since the value of a barrel of crude oil has been in a downward spiral since last year.
The government of Panama has proposed a tax rise on fuels and derivatives of 5 cents per liter in order to fund retirement plans in the country. The proposal is still in discussion; nonetheless, since several sectors of society have spoken against the measure, the government is now contemplating whether to maintain the existing tax rates.
Puerto Rico was another country that increased their oil import tariff from US $ 9.25 to US $ 15.50 per barrel effective in March 15 of this year. This initiative intends to balance the current fiscal crisis in the country.
The Guatemalan government has proposed to increase the tax on the distribution of oil and its derivatives (IDP in Spanish), with the aim to raise tax revenues in the year 2015. The Minister of Finance explained that, because of the way the tax basis is calculated for VAT in Guatemala, tax revenue is impaired by the low price of crude oil.
Finally in El Salvador, a law of 2009 provides that when the price of a barrel of crude oil is less than $50, an additional tax of 1% is automatically applied on the price of fuel. Although the law is in force, it is not being applied.
To learn more about:
Brazil tax increase: https://tax.thomsonreuters.com/blog/onesource/indirect-tax/brazil-increases-value-added-tax-gasoline/blog/onesource/indirect-tax/brazil-increases-value-added-tax-gasoline/?p=52045
Panama tax increase proposal withdraw: http://elsiglo.com/panama/autoridades-analizan-retiro-aumento-combustible/23841712
Guatemala tax increase discussion: http://test.prensalibre.com/economia/Impuesto-combustibles-SAT-Finanzas-Gobeirno_0_1290470943.html