Colombia’s controversial tax reform bill that seeks to boost private sector investment and employment by raising $4.37bn (14trn pesos) to finance next year’s budget by imposing higher taxes on the wealthy and reduce duties on businesses has been presented to congress.
The Bill has divided lawmakers in the country as it proposes fundamental changes to individual taxation, as well as that of foreign investors.
“This is a progressive law that means those Colombians who have more income will contribute at a higher rate for state financing and the redistribution of wealth,” Colombian finance minister Alberto
Carrasquilla said during a news conference.
Measures would include the increase of income tax for middle and upper earners to 37% (a five percentage points increase), while individuals whose net equity is greater than 3 billion pesos as of January 1, 2019 will be subject to a new equity tax. The Bill also proposes to introduce a voluntary disclosure programme in September 2019.
Companies would benefit from a decreased corporate tax, from 35% to 30%, and a preferential tax regime for Colombian companies whose main purpose is to invest or hold shares in foreign companies.
Among the parts of the bill most likely to face serious opposition is the extension of the value-added tax to include more products, even has it cuts the rate to 17% from 19% by 2021.
Several social organizations in Colombia are preparing a national mobilization on Thursday against the VAT increase on the family basket.
According to the teachers’ union, the tax reform planned by the government is an attack on the pockets of the Colombian people.
When presenting the Bill, Carrasquilla said: “This is a progressive law that means those Colombians who have more income will contribute at a higher rate for state financing and the redistribution of wealth.”