Congress begins the study of the Tax Reform
Colombia
29 abril 2021

COLOMBIA

On April 27, the Third and Fourth Committees of both the Senate and the House of Representatives held a joint meeting to begin the study of the tax reform bill (known as the “Sustainable Solidarity Law”). The initiative is made up of a series of economic, financial and tax measures aimed at increasing the government’s tax revenues and boosting economic development. The bill was presented by the Minister of Finance, Alberto Carrasquilla.

During his speech, Carrasquilla explained the 3 lines of action on which this initiative focuses: the first is the Value Added Tax, whose collection is for social investment; the second is the income tax to individuals, which seeks greater collection and better distribution. The third is the corporate income tax, which seeks to “promote efficiency and the reactivation of the economy”.

The Minister pointed out that “if Congress does not reach a consensus acceptable to all parties, there will be difficulties (…) the COVID-19 emergency continues, but the resources allocated to social programs are about to run out”.

The official also stated that the Government’s intention is “to reach a democratic agreement with all the political parties”, in order to achieve the best regulation for the country. In the following link you will be able to see the Minister’s complete presentation.

The reform arrives to Congress with no certainty of its approval

Verde (opposition), the U. (allied with the ruling party), Conservador (allied with the ruling party), and Centro Democrático (ruling) parties have expressed their rejection of the bill. However, legislators agree that an initiative that allows tax collection must be discussed, and therefore, each party will make their own proposals in the legislative discussions.

Colombia Justa Libres (allied with the ruling party) has already stated that it will propose “to limit tax deductions to companies, not to modify the taxation of individuals and to maintain the surtax on the financial sector”. Meanwhile, Centro Democrático (ruling party) suggests “maintaining the 1% wealth tax, freezing the corporate income tax rate at 33% for 3 years and extending the 3% surtax currently charged to banks to the entire financial sector”.

The national strike is maintained

The presentation of the tax reform provoked uneasiness in different sectors of the country and in spite of the government’s requests to postpone the social protests, organizations and unions carried on with the national strike on April 28, in order to express their rejection of the bill.   

Projections

The bill as it was filed will not be passed in Congress, due to the difficulty that the Executive has had in negotiating the articles with the legislators. Sources close to the Ministry of Finance stated that they are working to adjust the initiative according to the requests of the different political parties. However, the Executive stated that it will not withdraw the bill from Congress, but that it plans to make the necessary adjustments to achieve its approval.   

Next steps

Both the Senate and the House of Representatives have already assigned the legislators in charge of drafting the opinion (the report that recommends to the committees the approval or rejection of the bill). Until this report is filed in Congress, the bill may not be voted in the committees of the Senate and the House of Representatives.

From the Senate: Efraín Cepeda ( Partido Conservador – allied to the ruling party); Gustavo Bolívar (Decentes – opposition); Édgar Palacio (Colombia Justa Libres – allied to the ruling party) and Iván Marulanda (Alianza Verde – opposition).

From the House of Representatives: Katherine Miranda ( Partido Verde – opposition); John Jairo Roldán (Liberal – independents); Gilberto Betancourt (Cambio Radical – ally of the ruling party); Erasmo Zuleta (de la U – ally of the ruling party); Edwin Valdez (Centro Democrático – ruling party); Wadith Manzur (Partido Conservador – ally of the ruling party); Carlos Carreño (Comunes – opposition) and to David Racero, from the Decentes list (opposition).

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