Would a tax be considered to mitigate the cash crisis the country is going through?

The first week of June 2024 was quite busy for Colombia, especially in terms of the country’s finances. And since The National Government announced the partial blocking of some spending appropriations of the entities that are financed with the resources of the General Budget of the Nation and the cut of 20 billion pesos for this year.

(See: Minhacienda announces $20 billion cut from the General Budget).

“The collection goal will not be met and that is why we adjust spending“, he explained in this regard, last Friday, June 7, from the Asobancaria congress, the Minister of Finance, Ricardo Bonilla.

In an interview with the newspaper EL TIEMPO, the official delved a little deeper into the decision made and explained the impact that the lack of compliance with tax collection has had on the country’s current cash crisis.

(See: Forced investments: reasons why the Government’s proposal would be ‘dangerous’).

“There is a problem and that is that the collection goals were not met in either 2023 or 2024. We will have to review how the figures were estimated and what has really happened. It is an evaluation of the reforms that were made in 2021 and 2022, their results and how far progress has been made in separating what corresponds to natural persons from legal persons.“Bonilla said.

He added that a decrease was found in collection of 15 billion pesos regarding the goalswhich means that, in real terms, “The budget will not be fully financed. A good part of this reduction originated from large taxpayers, who have already declared. They are even asking us for balances in favor, that is, for us to return them.“.

(See: ‘The collection goal will not be met and that is why we adjust spending’: Minhacienda).

Questioned by the 10 billion pesos that were projected to be received through arbitration of disputes by the National Tax and Customs Directorate (Dian), and that the amount, currently, would be 0 due to the lack of approval of the law that would allow tax conflicts to be resolved more quickly, as stated the former director of the entity and current Minister of Commerce, Luis Carlos Reyes, Bonilla said that “as of May, 15 billion pesos had not been collected and the issue of litigation arbitration was never incorporated there. That was for the end of the year.”

“The law was never made because it was also a misinterpretation of the issue. In reality, when the project was proposed and filed, the first to oppose it was the Council of State and it put us in a dilemma as to what the management of justice really is and in the end we ended up withdrawing the bill because the Council showed that they were faster and more efficient than any arbitration process“he added.

(See: Seven proposals from experts to give a boost to the Colombian economy).

Finally, Bonilla spoke about whether it is possible to propose a new tax reform to counteract the cash crisis that the country is experiencing, ensuring that It’s not a priority.

“What we are going to do with the new director of the Dian (Jairo Orlando Villabona) is to evaluate what has happened with the previous reforms and to what extent they have been exhausted or are missing things that can be developed, above all, the most important thing is carry out fiscal management and separate what corresponds to natural persons. The initiative that would be presented is to reduce the income rate paid by companies“he concluded.

(If you want to read the entire interview of Ricardo Bonilla, the Minister of Finance, with the newspaper EL TIEMPO, click here).

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