Colombia’s revised tax measure will seek to raise nearly $ 4 billion – finance minister By Reuters


© Reuters. FILE PHOTO: Jose Manuel Restrepo, then Colombian Minister of Commerce, speaks during an interview with Reuters in Bogota, Colombia, January 30, 2020. REUTERS / Luisa Gonzalez / File Photo

By Nelson Bocanegra and Carlos Vargas

BOGOTA (Reuters) – Colombia will seek to raise at least $ 3.97 billion through a new tax reform measure to be proposed to Congress, Finance Minister Jose Manuel Restrepo said on Tuesday as the government seeks to consolidate the country’s finances amid growing credit rating and debt problems.

The target of 15.2 trillion pesos in the so-called social investment law is significantly lower than the 23.4 trillion pesos ($ 6.12 billion) sought by the government in April, before protests and the opposition from the legislature did not force the withdrawal of this bill and the resignation of Restrepo’s predecessor.

“The first big consensus has to be on vulnerable people,” Restrepo said at a launch event.

The bill will be presented to Congress at the start of the second legislature of the year on July 20.

The funds raised through this measure will be used to cover the budget deficit and consolidate social programs as well as to finance economic recovery and employment, he said.

The bill would increase corporate income tax by 5 percentage points to 35% from 2022 to fund social programs, raising some 6.7 trillion pesos.

It would also spend 1.9 trillion pesos per year in public savings through cuts in the costs of cellphones, rents and government vehicles, according to a document shared by the president’s office.

The government hopes that some 2.7 trillion pesos will be collected through the fight against tax evasion, with the bill enabling it to better track owners or beneficiaries of businesses so that they can be charged, among other measures. .

The updated law would change Colombia’s fiscal rule – a measure imposed in 2011 to prevent deterioration in public finances – to allow for new fiscal targets amid the country’s rising debt driven by the pandemic.

The failure of the previous reform proposal, the expected increase in net public debt to 65.1% of GDP this year and doubts over Colombia’s medium-term fiscal management recently led rating agencies Standard & Poor’s and Fitch to lower his credit rating to the junk level.

The government estimates that the budget deficit will reach nearly $ 25 billion this year, or 8.6 percent of GDP, before falling to 7 percent of GDP next year.

($ 1 = 3 824.08 Colombian pesos)

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