New tax reform, the challenge of the Colombian government 2:53
(Reuters) -
The Government of Colombia filed a tax bill in Congress on Tuesday to obtain 15.2 trillion pesos (US $ 3,955 million) to alleviate its ailing finances impacted by the coronavirus pandemic, amidst a new day of social protests.
The so-called Social Investment Project is lower than the one presented by the Government of President Iván Duque in April for 23.4 billion pesos (US $ 6.089 million) and that the president withdrew under pressure from a wave of social protests and the rejection of congressmen , which also led to the resignation of the then Minister of Finance, Alberto Carrasquilla.
The project would benefit 7.8 million households and will focus on reactivating the economy, granting subsidies and incentives for youth employment, as well as stabilizing public finances, the finance ministry said.
In addition, the initiative is focused on eliminating some exemptions and imposing taxes on companies and avoided touching people's pockets.
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"This social investment law (...) lays the foundations so that, no matter how distant our destiny may seem, all Colombians have the opportunity to come to fruition," said Duque, during the installation of the second legislative period.
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Recently, the Minister of Finance, José Manuel Restrepo, estimated that the project would be approved in August.
Among the main proposals of the law are to establish a rental rate for companies of 35% from the current 31%.
It also raises a surcharge to the financial sector of 3 percentage points until 2025, a tax standardization is established to regularize the capital of Colombians abroad.
The fiscal project emphasizes on combating tax evasion to obtain about 2.7 trillion pesos per year and an austerity plan that would generate savings of 1.9 trillion pesos between 2022 and 2032, on average.
The fourth largest economy in Latin America faces the challenge of stabilizing its finances undermined by the increased public spending that the coronavirus pandemic has meant.
For this year, the country will have to cover a fiscal deficit of about 94.7 trillion pesos (US $ 24,642 million), equivalent to 8.6% of GDP this year, which would yield to 7% of GDP in 2022.
The deterioration of the government's accounts led the rating agencies Standard & Poor's and Fitch to withdraw the coveted investment grade from the country.
The fiscal project was filed hours before the start of a new day of demonstrations by some indigenous communities, students, and workers' unions, who plan to march in Bogotá and other cities.
The massive protests began on April 28 and lasted for about six weeks, and in some cases turned violent.
Union leaders plan to present a package of proposals to Congress, including a basic income plan and other social demands.
Protests in Colombia
