If there is something that Latin American politicians still do not understand, it is that planning for the long-term future of their countries must entail ensuring judicial stability. Only by acting within recognized judicial procedures can the Latin American economies escape their terrible nickname of ‘banana republic’ that hangs round their necks like the dead albatross of Coleridge’s ‘Ancient Mariner’.

The Panamanian authorities that seek to raise tax collection by fiscal reforms announced last week, which will affect the gaming industry by a 5% rate increase on slot machine winnings, should study the case of Peru where, for years, mistaken decisions have caused extensive damage to businesses, the treasury, and to the workers. Companies need to be able to plan without the goalposts constantly being moved.

Today there exist a high percentage of slot machine businesses operating in Peru who pay not even one cent of tax. This is because of the legislative dim wittedness that caused the gaming rules to be changed without taking into account the economic commitments made under previous legislation. These businesses now work under favourable findings by the courts that give them protection under the law, but the uncertainty of the regulatory system has caused foreign investors such as Ladbrokes and Sodak to leave the country, with a corresponding loss for everyone and particularly the country.

Yesterday the three principal casino operators in Panama rejected the government’s proposal. A communication from Fiesta, Crown and Cirsa explained that the proposed financial measures being discussed in Parliament this week would affect the judicial security of the country: “It alters the financial terms under which the gaming licences were contracted, whereby the State was paid more than 25 million Balboas (US$25 million).” The communication went on to point out that foreign companies had invested over US$150 million.

Foreign investors from Chile, Spain and Canada, together with local investors, operate ten casinos that contribute some US$20 million a year to the Panamanian Treasury and employ 3,200 people. The proposed fiscal reforms have been rejected not only by the gaming industry but by the National Council for Private Enterprise (CONEP) who have said that the proposals would have a negative impact on productivity and the generation of employment in the country. (E-01.19.05)

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