Colombian lawmakers will today introduce a tax reform proposal aiming to raise at least $3.97 billion for Bogota’s treasury. Colombian
Colombian lawmakers will today introduce a tax reform proposal aiming to raise at least $3.97 billion for Bogota’s treasury.
Colombian President Ivan Duque’s government previously tried, and failed, to pass wide-ranging tax reforms. The previous reform legislation led to nationwide protests and riots, with the opposition claiming that Colombia’s rampant economic inequality—the second worst in South America—would only be exacerbated with Duque’s proposed reforms. The riots, combined with the deterioration of public finances, rising government debt and the past two years of large fiscal deficits have led both Fitch and S&P to downgrade Bogota’s sovereign debt to “junk” status.
Protests over the previous tax reform legislation have morphed into continued violent exchanges with the government, leading officials to moderate the reformed proposals. Shifting the message away from tax increases, Duque’s government seeks to increase enforcement of tax collection, go after tax evasion, increase business taxes and cut government spending. If this bill passes, Bogota’s credit rating will not be raised, however this year’s projected fiscal deficit of 8.6% of GDP will be reduced to 7% next year and the country will be on good footing to enact further economic reform measures in 2022.