Business Owners Foot Pensionado Discount Bill in Panama
Should Foreign And Local Retirees Be Eligible For The Same Discounts in Panama?
Panamanians and foreigners who have pensionado status in Panama are entitled to numerous discounts on everything from entertainment to medications. This visa option has lured thousands of retirees to Panama from countries around the world. This program is great for those taking advantage of the discounts, but it’s not such an ideal situation for those giving the discounts.
Under Panamanian law those in possession of a pensionado visa are eligible for a 50% discount on movies and sporting events, 30% off transportation and 25% off restaurant meals. This includes Panamanians and foreigners alike, and businesses are obligated by law to honor these discounts.
Many Panamanians are trying to survive on a meagre pension, and in comparison, foreigners have much larger disposable incomes. The main downside to these discounts is that it’s the business owners - not the government - that are responsible for taking the loss from those discounts.
If you receive 25% off your meal, the government does not compensate the restaurant owner. The 25% comes out of their profits. For many restaurateurs this can have a pretty big impact on their bottom line. Since this is a government incentive, it would only make sense that the government is responsible for covering the difference. Unfortunately, that is not the case.
Is it fair for the small business owner to have to cover the cost of these discounts, or should the government reimburse them? Since the government is not helping to offset this expense, should foreigners be able to take advantage of these discounts or should they be available only to Panamanians? What is your opinion?
| Written by Rebecca Tyre |  |
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Filed under: Business, Living & Retirement, News on August 1st, 2008
My answer will be a mix of yes and no. Here is my take:
1) I usually do not like the idea of having the government regulate businesses at that level. However, as a business-person (OK, not really, at least the company where I work for, which has a Hospitality component, do this), I would have implemented a senior rate anyway to attract that market. Whether it is a 25% discount or not, that is another issue… Unfortunately the problem is not the discount itself, it is that juega-vivo attitude when the senior is the one paying the bill and expects that discount to be applied to whole bill rather than him/herself - despite notes saying the discount is only applicable to them.
2) By allowing the discount to be given to Panamanians only, you are telling foreigners they are second-class citizens. That is a bad idea.
3) I am biased on this one, based on my experience with the Panamanian bureaucracy: If the government will provide reimbursement, it might be a real pain to obtain, not to mention somebody will try to exploit it (read: juega-vivo).
A possible solution would be to implement an approach similar to the one used for sales taxes on purchases made by visitors (which I am not sure if exists in Panama). Of course, it might be hassle as well, but it will have no impact for the businesses.
At the end of the day, I think it is up to the retiree: If you don’t have the means, sure, go ahead, use it, as it is a “benefit” given to you by the government of Panama. However, if you have the means, don’t be cheap and support the local economy.
Foreigners are not second class citizens. They’re NOT citizens (of Panama), period. That’s why they’re FOREIGNERS. Do you think you have the same right as U.S. citizens in the U.S.A.? Absolutely not. I think that the pensionado program was not planned well. The benefits of retirees in Panama have to generate not only fair profits for commerce/services, but also more taxes to improve infrastructure, security, etc. The bonanza doesn’t seem to be benefiting the lower income panamanians, who now see their standard of living deteriorating due to the higher cost of living brought in great part by the influx of foreigners.
I ask for my retiree discount for airfare and really expensive restaurants. I do not use it at smaller or family restaurants.
Most times I am given the discount by the staff, especially at the movies and medical offices, without asking or showing my Id.
This is an incentive offered by the government , to encourage us to move here, but paid for by the businesses. If the companies are big and know they will be dealing with these discounts they factor them in.
Smaller, family owned companies are different I would never ask them to subsidize my expenses.
Most retirees are not ‘rich’ by North American standards, but they are ‘rich’ by local standards. A little balance and everyone benefits; hopefully no one suffers.
I’ve been harping on this subject for years.
Basically I think it’s a disgrace and gives non-citizen pensionados here a bad name when they use this discount indiscriminately. The law was originally written to provide low-income Panamanian retirees with a benefit, but now even wealthy gringos are trying to save a couple bucks at a cheap restaurant.
Use these discounts for expensive purchases (medical, airlines, fancy hotels and restaurants, etc.) but not in the local places please.
Fancy hotels and restaurants are luxuries, not necessities. Same goes for entertainment. The owners of such establishment should not carry the burden of a campaign to attract foreign retirees, so they end up increasing the price of everything, so basically, the Panamanian consumers end up paying for the discounts.
Alfonso, I agree with most of what you wrote, except two points:
1) “Second class citizen” does not imply somebody has to be a citizen. To quote Wikipedia: “Second class citizen is an informal term used to describe a person who is systematically discriminated against within a state or other political jurisdiction, despite their nominal status as a citizen or legal resident there”.
2) I am not aware of US laws as I am not a gringo; I am a Canuck. Here, there no senior discounts and, as I mentioned in my comment, every business set their own rules.
Having said all that, from your perspective, any suggestion on how to solve this?
Well, it’s not the foreign retiree’s fault. It’s the fault of the demagogues in the government. Having said that, we have to concede that the purpose of attracting foreign retirees should be to improve the standard of living for everyone. As it’s in place now, it’s doing the opposite. The ultimate effect of these measures increase the price of things for panamanian consumers, who end-up paying for the discounts given to the retirees. I think the government should allow for tax breaks for the business owners, so that it is the goverment that pays, at least in part for these discounts. I also think that the tax code is way too permissive and that foreign retirees should contribute more in taxes, it’s only understandable that they do if they want infrastructure, public services and security to improve and continue as more people move in. It can be done and STILL keep Panama in a favorable position tax wise.