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Colombian government lowers revenue target for proposed tax reform

Economic IndicatorsApr 28, 2021 01:25PM ET
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© Reuters. FILE PHOTO: Colombian President Ivan Duque Marquez delivers remarks during the AIPAC convention at the Washington Convention Center in Washington

BOGOTA (Reuters) - Colombia's government has lowered the amount of money it hopes to raise from a proposed tax reform in an effort to win enough support to push the legislation through Congress, Vice Finance Minister Juan Alberto Londono said on Wednesday.

The government is now looking to raise between 18 trillion and 20 trillion pesos ($4.84 billion to $5.38 billion), Londono said. He added that it was open to negotiating other parts of the proposal, which includes measures to reduce sales tax exemptions and change income taxes.

An original plan presented to lawmakers last week sought to raise an additional 23.4 trillion pesos ($6.29 billion) - equivalent to 2% of Colombia's gross domestic product (GDP) - by eliminating many deductions and increasing duties on individuals and business.

"We're looking for consensus, we're looking for ways everyone can do a little more to cover the gap, to have peace of mind that our country can pay its debt and that our vulnerable population isn't going to suffer because we can't pay for social programs," Londono said on local radio station Caracol.

"Maybe the amount will fall, which will reduce social programs in time and size ... we could be thinking of a collection between 18 (trillion) and 20 trillion pesos," he said.

The proposed reform has met stiff resistance in Congress, including from a coalition of parties that supports President Ivan Duque's government. Opponents argue the changes would unnecessarily burden taxpayers already stretched by the economic crisis caused by the coronavirus pandemic.

Colombia's largest unions plan to hold a strike on Wednesday to protest the measures as well as other government policies.

"A revision of sales tax for public services is possible, we could look at the chain of sales tax in family groceries so that prices for the end consumer aren't affected, as well as a progressive income tax," he added.

"Everything is open to discussion," he said.

Colombian government lowers revenue target for proposed tax reform
 

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