The good, the bad and the ugly of the Petro government’s tax reform

The tax reform of the government of Gustavo Petro The conciliation passed and next Tuesday, November 15, it would receive the last approval from Congress, both in the Chamber and in the Senate.

(Read: Are there still days without VAT? This was defined after tax reconciliation).

However, the text that was approved had important changes with respect to the initial draft proposed by the Government. Initially, analysts rated the tax as “progressive” and an important precedent in tax terms.

Oliver Pardo, economist and director of the Fiscal Observatory of the Javeriana University, highlights wealth tax. “In Colombia wealth is highly concentrated. If one looks at those 4 million filers, one finds that the 400,000 richest have more than 150 times the wealth of the 400,000 less wealthy filers.“says the expert.

Problem that you see more accentuated in the general population since the figures only include the declarants. Likewise, another of the positive elements of the reform that were not approved was, for Pardo, the tax on mega-pensions.

(Also: Tax and Budget, Petro’s first achievements in his presidency).

This tax, worth the clarification, will be progressive with marginal rates: 0.5% for those of more than 3,000 million pesos; 1% for those of more than 5,000 million pesos and 1.5% for those of more than 10,000 million pesos.

The expert points out that among the negative aspects of the reform is the dependence on revenue from the hydrocarbons sector. “For subsequent years, 2024 or 2025, if the price of oil falls, there will be fewer tax resources. In general, it is not positive that the reform is so dependent on a single economic sector“, said.

Likewise, the expert clarified that one of the aspects that the reform should improve and that was not achieved was the simplification of the income statement for natural persons and the expansion of the base of declarants.

(Keep reading: Deficit and social spending?: what would the tax collection be used for).

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