These are the central points of the tax reform project in Colombia

First modification: 08/09/2022 – 20:12

The bill filed by the new leftist government of Colombia to modify the tax system promises a heated debate in the Congress of the Republic, where it was filed this Monday, August 8.

The initiative proposes to limit tax benefits for people who have incomes above ten million pesos per month (about ten minimum wages), which represent two percent of the population.

They also want to permanently tax those citizens with assets of more than 3,000 million pesos (about 691,000 dollars at today’s prices). With this increased collection of taxes for individuals and the reduction of tax benefits for companies, the Government intends to collect enough money to reduce the social debt.

The project predicts a far from easy passage through Congress, despite the Petrista majorities, with an opposition led by the former ruling right-wing Democratic Center party that considers that it will affect the economy and employment.

Food and oil, among the most controversial points

The initiative includes, among others, the taxation of sugary drinks and ultra-processed foods, a proposal that has received all kinds of criticism from those who argue that it will make the consumption basket more expensive for those with lower resources.

Single-use plastics would also be subject to taxation, as well as exports of oil, coal and gold, when the prices of these raw materials exceed a certain threshold. The measure would imply establishing a 10% tax on the surplus generated by these external sales over a base price.

In other words, if the reference price set by the oil authority is 48 dollars per barrel of oil and the barrel is quoted at 90 dollars per barrel, the tax would be generated based on those surpluses obtained from that threshold, something that the Executive sees as a way to compensate with money the environmental impact of the exploitation of resources.

The opposition has criticized the incoming government’s promises as oil and coal are the country’s main exports and President Gustavo Petro has vowed to ban all new oil development and move the nation away from coal production.

Although the new president’s promises have come to worry the market, his finance minister, José Antonio Ocampo, a longtime official, has worked to allay those fears, telling Reuters in a recent interview that “he will not do crazy things, nor will he will allow madness”.

With Reuters and EFE