A group of motorcyclists during a demonstration in Bogotá, on April 16, DPA via Europa Press / Europa Press
Finally, the government of Iván Duque presented the much-announced third tax reform.
It is a reform that is based, fundamentally, on the taxation of the middle and salaried sector.
Therefore, the country has read it as a real blow to the poor and the battered middle class.
In addition, a large part of society has charged the president one more lie, because, in a political campaign, he said that he would not raise taxes and that he could even lower them.
On the other hand, he has approved two tax reforms and, the one he presented in the last hours, would be the third.
The reform proposal is based on three pillars:
1. Raise VAT on various products and services, for example, VAT is contemplated for public services in strata 4, 5 and 6, also, the internet service will have VAT and even funeral services.
It is almost forbidden to die in Colombia, it would be very expensive.
2. The recordable base of the income tax is expanded, that is, people who earn 2.5 million pesos or about $ 800 per month must pay the tax.
A real blow to the middle class.
3. Various goods will go from being exempt from VAT to being excluded. This will increase costs for producers and hence consumer prices. A single data, the National Federation of Poultry Farmers (Fenavi) says that the price of eggs or chicken could increase by 5%. Producers will not be entitled to receive compensation for the tax paid. Two questions arise at this point: why such a reform in the midst of an economic crisis and why would it affect those most affected by the pandemic.
Iván Duque's first tax reform, in 2018, cut nearly nine trillion pesos in taxes on large companies and failed to raise taxes on anyone. It did not compensate for that fiscal gap, therefore, the fiscal problems were very strong. Despite this, unemployment continued to rise, that is, the overflow theory of taxing the rich to make them richer and thereby supposedly increasing productivity, resulted, as expected, in a lie. This theory of overflow is false, but the Colombian political class continues to believe in it.
In the midst of the economic disaster, the pandemic arrived and the government delayed giving the aid, these arrived between May and June 2020 when the economic disaster was already great and many small companies had gone bankrupt. Now, in 2021, there are two peaks of the pandemic, the first in January and currently the other is going through, therefore, the economic disaster will be even worse. Therefore, criticism of the tax reform has been quite strong. A reform that seeks to raise 23.4 billion pesos.
It should not be forgotten that, in 2018, when the first tax reform was given, they also wanted to increase VAT, but the rejection was very great, so the government removed it to avoid the crash in the polls, which was impossible. In the end, Colombian society punished Duque. From that collapse it never stopped again, it barely had a glow for a couple of months in the middle of a generalized quarantine, when in most countries the presidents rose in the polls. Everything indicates that the current reform will end up throwing him, his administration and his political party to the ground.
In addition, the possibility that Congress will approve the current tax reform is low, since it is less than a year before elections and the parties that approve the reform, possibly, will be punished at the polls. As never in the history of Colombia, hundreds of citizens are monitoring legislative activity and several citizen initiatives have said that they will create a wall of infamy to publicize those who will vote positively on the reform. In any case, the government will always have the possibility of giving congressmen patronage incentives to vote positively.
