New tax reform in Colombia raises controversy

(Prensa Latina) A tax reform bill promoted by Government of Iván Duque, replacing the one that caused the largest social outbreak in last 70 years in Colombia, fuels today new debates in the country.

Senators and representatives from Dignidad party and the Green Alliance called on Congress (bicameral parliament) not to pass the increase of up to 35 percent of income tax on small and medium-size companies.

According to congressmen from these political forces, the new proposal ‘violates Article 363 of the Political Constitution of Colombia, establishing that taxes must be progressive, that is, rates must go from lower to higher as there is increase of amounts to be taxed’.

The call is related to the increase from 33 to 35 percent of income tax on companies, but without setting them apart by small, medium and large.

Parliamentarians warned if such article of the tax reform is passed, these entities, generating 80 percent of employment in the country, will be severely hit, after being already touched by effects of Covid-19 pandemic.

For his part, David Racero, representative to the Chamber for Colombia Humana, pointed out that the new proposal is a reform to reassure creditors without being structural by not implementing policies to promote entrepreneurship or to reduce inequality.

Previous tax reform included the increase of various taxes and President Iván Duque planned to implement it in 2021, amid the health crisis caused by Covid-19. This decision produced general upset and led to national strikes on April 28, evolving into massive protests of rejection throughout the country. It brought the resignation of Finance Minister Alberto Carrasquilla and the withdrawal of the proposal.

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