Colombia: Tax Reform 2.0 has 1 Month Left to Pass
While talks are progressing with the Unemployment Committee, the Government has not yet presented a concrete proposal. Standard & Poor’s downgrades the country.
Although the Executive has given some clues about what the reform would not take, there is less and less time for a project of this magnitude to be processed in this legislature, which ends in exactly one month, on June 20.
It should be remembered that on May 2, Colobia President Ivan Duque asked Congress to withdraw the project filed by the Ministry of Finance and also asked “to urgently process a new project as a result of consensus and thus avoid financial uncertainty.” as he stated that day in his address.
However, 18 days after that announcement, the country still does not know of a new project. Of course, some components that the initiative will have are known, such as taxes on people who earn more and companies.
In fact, Josde Manuel Restrepo, the new Finance Minister, told this newspaper in recent days that “one of the principles that we have indicated is that the reform be very prudent and does not affect the middle class of our country, which has been one of the hardest hit. That is why we have to be very careful with this class, just as we are taking it with the most vulnerable in society ”, said the official.
Restrepo assured that the VAT exemptions will not be eliminated nor will the taxable base of the income tax be extended to natural persons, as the last initiative had raised and that, at the time, they were the main sources of collection.
With these principles as a basis, the Government has continued, in parallel to the dialogues with young people and representatives of unemployment, the conversations with different sectors to discuss some points on reform 2.0 and achieve consensus, which were not achieved with the previous initiative.
But the time remaining for the Executive is tight if one takes into account that the project would need at least two debates in Congress, in case it is processed with an urgent message like the last reform.
And, in that sense, it should be remembered that in the event that the Government presents the project in the coming days before Congress, the initiative must be reviewed by the parties, speakers must be assigned and when the presentations are ready, the discussion will begin. articulated in less than a month.
Given the possibility that the legislative initiative will not be approved in this legislature, the Government will have the second semester to present or advance in the processing of the project, with the beginning of the next legislative period, on July 20.
While the Government defines the tax reform package 2.0, with which they hope to raise at least $ 14 billion, the idea of charging more taxes to companies and people with higher incomes has sounded among the same businessmen, political parties and study centers.
It should be remembered that the National Association of Entrepreneurs (Andi) and the National Trade Union Council proposed that the benefits that were included in the 2019 tax, such as the ICA and income discount for companies, be postponed. They also raised a wealth tax for individuals.
Along the same lines, Anif proposed to apply a surcharge on income tax for filers with the highest 25% income; a pension tax of more than $ 6 million per month; improve the tax on dividends, and that more people pay wealth tax.
And while the components of the initiative are being defined, congressmen told this newspaper that everything points to news of the Government’s 2.0 tax reform next week.
In the midst of Colombia’s difficult political, social and economic situation, the rating agency Standard and Poor’s lowered the country’s rating from BBB- to BB +, with a stable outlook.