The first week of May 2021, when the country was facing the worst protests in decades and whose infiltration of criminal and drug trafficking groups was notorious for violence, Finance Minister Alberto Carrasquilla fell. The reason: the tax reform that he presented to Congress on behalf of the Government and sought to collect 26 billion pesos.
The fact inflamed the country and angered those who were in the streets. The left was outraged and with it the Petrismo, which was already in a presidential campaign. The then minister Carrasquilla ended up resigning due to strong pressure and the reform also fell apart.
Paradoxically, today the elected president, Gustavo Petro, intends to make a tax reform that collects 50 billion pesos, almost double what Carrasquilla was looking for. And where was the outrage?
To carry it forward, Petro made sure of endorsing Roy Barreras, an old acquaintance of traditional politics who has been in Uribismo, Santismo and now Petrismo, and who knows perfectly well how congressmen walk the reforms of a president . Most likely, jam factories will be churning out steam.
Perhaps aware of that, until today, only the Democratic Center paints as opposition. It is so dramatic that even the conservatives have already surrendered.
But how does the Petro Government intend to collect 50 billion pesos in taxes? Ultimately, will all Colombians end up paying more taxes?
WEEK interviewed Ricardo Bonilla, economic advisor to Gustavo Petro’s campaign, who revealed details of what the tax reform that is being prepared will be and with which a collection of some $50 billion is expected.
“There is no draft yet. The president-elect proposed a national agreement, so it is a question of agreeing on general aspects. What there are still are the campaign ideas that must be landed for the national agreement, ”he assured, and said that the tax is expected to be approved in December.
Regarding the income tax, Bonilla said that the idea is to balance the burdens between companies and Colombianssince currently 80% of the income from this tax comes from legal entities and only 20% is contributed by natural persons.
“The tax is not progressive, because high-income people are not contributing what they have to contribute. The reform seeks to identify the real assets and income of these natural persons so that they pay with a progressive rate, ”he explained to WEEK.
The economic advisor to Gustavo Petro’s campaign made it clear that the income tax threshold for natural persons will not be lowered. For example, Colombians who had gross income equal to or greater than 1,400 UVT ($ 50,831,000) in 2021 must declare income this year, although it must be borne in mind that declaring income does not always mean paying.
“Revenue collection in natural persons is low because Colombians with higher incomes are not paying what they should pay. So that, by better identifying their assets and income, individuals will end up paying more taxes”, he told WEEK.
Also, in the income tax there will be another change, perhaps the most important, and it has to do with eliminating the card system, so that “everything goes to a single card and that card has the same rate, whatever the origin of the entry”.
What will happen to VAT?
Ricardo Bonilla was clear in saying that, for now, the VAT tax will not be touched. “We are not going to touch the basic basket, that is a clear red line,” he said, and recalled that The National Strike of 2021 originated from the proposal of the current Government to tax some products of the basic basket with this tax.
However, he assured that “the VAT tax must be given more time” and that the efforts of the economic team will be concentrated on income tax, equity and dividends.
And the 4 x 1000?
The 4 x 1000 was born as a temporary measure to deal with the banking crisis that the country was going through in 1998, but it did not there is nothing more permanent than the temporary and this tax has already been in force for 24 years in Colombia.
Bonilla assured that, for now, this tax will continue to be maintained in Colombia, while a better solution is found. “If it’s removed, you don’t have to replace it. The suggestion to replace the 4 x 1000 is to increase the VAT rate by two or three points. we’re not going to do it”, he assured in conversation with WEEK.
Less tax benefits for companies
The tax reform that Gustavo Petro’s team is preparing also contemplates eliminating tax exemptions and benefits that have been given to companies and leaving “a clear lower rate” for large companies and “a slightly lower rate” for small ones. .
With this proposal, it is sought that all entrepreneurs in Colombia have the same rules of the game and “not what exists today”. “There is absolutely unfair competition,” she assured, so the idea is to return to “healthy competition.”
These exemptions that would be removed are related, for example, to the legal stability contracts of the free zones and the 30-year hotel agreements. “All (the benefits and tax exemptions) must enter an organization process,” he said.
Faced with the possibility that the elimination of these exemptions and benefits ends up increasing the costs of goods and services and, therefore, affects the pockets of Colombians, Ricardo Bonilla responded that this measure “does not have to affect them.” “The tax statute with which you work cannot be special and different from others, because it is unfair competition“, said.
Colombians are preparing to live a new stage of change, in which, surely, they will also pay more taxes.