Bill 494.

Summary.

The bill establishes a framework for transparency, periodic evaluation, and oversight of incentives, subsidies, tax exemptions, and other benefits granted by the Panamanian State. It governs their creation, elimination, administration, evaluation, amendment, and publication, applying fiscal responsibility, cost-benefit, equity, and sustainability criteria. Its scope also covers transfers and benefits granted by state institutions, whether already in place or awarded after promulgation (Arts. 1-4).

A new incentive, subsidy, or exemption would require a fiscal impact study, a cost-benefit evaluation, and clearly defined goals and time frames. The bill creates the National Registry of Incentives and Subsidies (Registro Nacional de Incentivos y Subsidios, RENIS), based at the Ministry of Economy and Finance (MEF), as a public registry with information available online. Documents generated by the registry would be held at the MEF under the custody of the relevant minister. RENIS would conduct analyses and evaluations. It would be chaired by the minister of economy and finance or a designee and include representatives of the National Assembly (Asamblea Nacional), the faculty of economics of the university of Panama, the Office of the Comptroller General of the Republic (Contraloría general de la República), organized civil society, the private sector, and workers. Meetings would be called in writing and digitally by the minister or a simple majority of members; the bill provides for meetings every 6 months and makes them mandatory each year (Arts. 5-8).

Incentives, subsidies, exemptions, and other benefits would be evaluated every three (3) years, while direct subsidies would be evaluated annually. Each year, the MEF would publish a tax expenditure report setting out the fiscal cost of exemptions, incentives, or subsidies and their economic and social impact. Incentives or subsidies could be amended or eliminated if RENIS determines that they fail to meet their objectives, lack economic justification, or cause market distortions or inequity. Those that have not been allocated would undergo a new evaluation (Arts. 9-10).

The MEF would establish a digital portal showing allocated benefits and amounts, principal beneficiaries, and previous evaluations. Through public consultations, RENIS would receive civil society requests concerning the creation, renewal, or elimination of incentives and subsidies. It would send recommendations to retain, amend, or eliminate benefits that fail to meet their objectives to the National Assembly or the Executive Branch (Órgano Ejecutivo), so that changes to or repeals of the laws or decrees creating those benefits could be undertaken. Decisions on these reports would require a simple majority of registry members. The Executive Branch would issue implementing regulations within no more than six (6) months, and the law would take effect six (6) months after promulgation (Arts. 11-16).

In Panama, the bill assigns roles in managing and reviewing these benefits to the MEF, RENIS, National Assembly, Office of the Comptroller General of the Republic, and Executive Branch. Its provisions could concern beneficiary organizations and individuals or legal entities, as well as civil society, the private sector, and workers.