What would tax reform look like under Gustavo Petro? Consulting team sheds light

President-elect of Colombia, Gustavo Petro (Colprensa-Mariano Vimos)

Tax reform is the initial project of the future government of Gustavo Petro which, as in the campaign, has aroused the most interest, as well as the one who will be responsible for leading it from the Ministry of Finance. The candidate had argued that a collection should be made, with taxes and other mechanisms, up to 50 billion pesos. For the moment there is no draft, but his advisers gave some details on the path the fiscal plan might take for the next four years.

Ricardo Bonilla He was one of Petro’s economic advisers, the one who publicly provided the most details on what is being structured. As he told the newspaper El Tiempo, it is expected that the majorities in Congress will be consolidated first, but in addition it will be the members of the parliamentary caucuses of the political parties within the National Accord who could contribute to the construction of tax reform.

Bonilla, who was Petro’s finance secretary in the Bogotá mayor’s office, said the fiscal project will be built on the basis of the two commissions of experts hired in previous years to advise the government, one of 201.5 and the other from Canadians, in 2021.

The axes of reform that the elected government adviser has delivered focus interest on the income tax. As he told El Tiempo, the project should seek to make this tribute to natural persons more progressive, that is, a higher percentage of money is charged to those who receive more income, for which it will be necessary to clearly identify people’s income.

He explained that will not seek to lower the thresholdwhich was one of the most contested topics of the last tax reform for which the national strike awoke in 2021, which aimed to extend income tax to people with incomes from 2.5 million pesos per month.

As Petro said during the election campaign, interest in taxes will focus on the wealthiest. Bonilla assured the aforementioned newspaper that it will take remove exemptions to increase the effective rate paid by the 4,000 people who make up the wealthiest 1% of the country’s populationidentify their income and the reasons why they pay less.

As for the tax on the income of legal persons, that is to say companies, it will seek to improve equity, so that it is distributed proportionally among all. As Bonilla himself told Valora Analitik, it is envisaged to eliminate exemptions and benefits, but at the same time to reduce the rate differentially between small, medium and large companies.

One of the points for verifying the income of natural persons, by providing the DIAN with control tools, sIt will be a question of verifying that the incomes which they declare come indeed from the companies and not from the managers or the shareholders. As Bonilla explained to El Tiempo, there are properties that appear in the name of companies, but they are not really related to the business object and are inferred from it, when their natural owners should declare it.

Regarding VAT, Bonilla argues that it will not be changed because it directly affects the basic basket and this is one of the points you want to avoid. Although, according to Cecilia López, also an adviser to La República, a reduction for foods with more nutrients of this tax could be considered in the project.

We also knew, in recent days, that among the increase in taxes on the highest incomes, the collection of the highest pensions is envisaged. According to the adviser said Blu Radioabout 25,000 people earning more than 10 minimum wages could enter a payment schemebut without affecting those registered below this figure.

The economic team proposes that the tax reform be structural, that is to say that it can establish a collection mechanism that lasts over time, to avoid that changes are generated every two years in this area, increasing the ability against evasion.

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Alvin Nguyen

"Amateur introvert. Pop culture trailblazer. Incurable bacon aficionado."

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