How do Colombians perceive Petro after a month of management?
3:19
(CNN Spanish) --
The Government of Gustavo Petro in Colombia decided to modify its tax reform and exclude one of the proposals that had generated controversy: the tax on higher pensions.
Under the premise of "taxing those who have the most", the administration had proposed in the tax reform filed in Congress that pensioners who earn more than 10 million pesos per month would pay taxes for that concept.
According to the calculations of the Minister of Economy, José Antonio Ocampo, this implied taxing 0.2% of pensioners with a tax of around 20%.
Petro's tax reform is already in Congress: these are the main points
However, after a meeting with the tax reform rapporteurs of the parties that make up the Government, this reform proposal was withdrawn, as confirmed by the president at a press conference.
A woman protests against the tax reform proposed by the Petro government in Cali on September 26, 2022. (Photo by Joaquín Sarmiento/ AFP/ Getty Images)
More modifications to the tax reform
Petro also announced modifications to the taxation of the hydrocarbon sector, that is, the taxes linked to oil and coal.
On the one hand, the president said that royalties from the mining sector will not be deductible from income tax.
"The subsoil assets of the nation since the Constitution of 1886 are property of the nation, they are public property, they are property of the Colombian people, and to that extent the nation, when it grants its economic exploitation by an individual, has the right to royalties and therefore, these are not part of the accounting of the private companies that have this concession and are not deductible," explained the president.
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On the other hand, he announced a modification of the income tax surcharge paid by the oil and coal sectors.
The contribution they make will depend on the international price of the products, so that if prices reach a certain low point there will be no surcharge.
The Petro government has promised an ambitious social program and needs money to finance it.
His first calculations on the reform implied obtaining 25 billion pesos by 2023 (about US$ 5,000 million, equivalent to 1.72% of GDP) and twice as much in the medium term.
The administration projected that, in addition to reducing poverty, the reform would cause inequality in the country to fall nine times higher than what has been registered as an average in the last 14 years.
At Tuesday's conference, the president said that the value of the reform for next year would be about 20 billion pesos and could rise to about 23 billion by 2026 (between US $ 4,000 and 4,600 million).
Negotiations will continue in the coming days, before the text goes on to be discussed in the plenary session of the Senate and the Chamber of Deputies.
Together with the government bench and the @MinHacienda team, we have agreed NOT to tax pensions in the tax reform and to modify the taxation of oil and coal.
This reform does not affect the majority of Colombians, the collection will be for the highest income.
pic.twitter.com/82VIpipm3U
– Gustavo Petro (@petrogustavo) October 25, 2022
Colombia's growth will slow down sharply in 2023, according to the latest forecasts from the International Monetary Fund, which foresees a real increase in GDP of 2.2% compared to 7.6 in 2022.
Added to this forecast is the strong depreciation of the Colombian currency that is due, according to experts, to external and internal factors.
Globally, there is a fear of a recession that adds to the aggressive increase in interest rates by the US Federal Reserve and causes currencies to depreciate.
Internally, concerns about Petro's economic policies, especially those linked to hydrocarbon exploration, may be having consequences in the markets.