The director of Fedesarrollo, Luis Fernando Mejía, said that Colombia will inevitably face a new tax reform in the next government, in a context of low economic growth, fall in investment and a fiscal deficit that is around 7 % and 8 % of GDP.
“There will undoubtedly be a tax reform. We have no doubt. This government will surely not be able to approve it because there is no political environment, but the next one will have to do it,” he said, “he said The manager during a conference before the country’s merchants on the first day of his National Congress in Medellín.
And warned that the new president of the Republic who will be elected in 2026 that will have a government program that he will want to comply with but, surely, You will meet a Minister of Finance to notify you the restrictions and fiscal challenges you must face.
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Mejía explained that The Fiscal Adjustment Program that the Study Center will present to the presidential candidates contemplate a reduction in the fiscal deficit by three points of GDP. The scheme, as detailed, will be based on two fronts: public spending cuts and moderate tax increase.
Fedesarrollo will present a fiscal adjustment program to the Presidency.
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The economist emphasized that “you cannot ask for greater tax effort of entrepreneurs and households without cutting public spending.”
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According to their calculations, the adjustment would include a reform that collects a point from GDP, mainly through the extension of the tax bases, both of people and the VAT, given the limited space to raise rates.
“No one likes to hear that, but there is no other way out. That’s where the collection is really,” said Luis Fernando Mejía.
The study center suggests reducing the income tax rate to stimulate competitiveness and investment.
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Reduction of the corporate rate and subsidies cut
Within the proposals, the economist said that Fedesarrollo will propose to reduce the income tax rate to companies, today by 35 %, in order to improve competitiveness and attract investment.
In parallel, the cost cut must be close to 1.3% of GDP initially. This measure, he said, would focus on three pillars: diesel subsidies, subsidies for public services and personnel expenses. These adjustments would contribute between one and two additional points of GDP.
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From your point of view, the fiscal adjustment You cannot simply be done by asking for more taxes for a deficit of more than 7% of GDP, As the government intends today.
The tax adjustment would include a tax reform that collects a point from GDP,
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The director of Fedesarrollo recalled that, despite external shocks, Colombia has shown resilience against the region, with 33 years of sustained growth and an 85 % increase in per capita income In three decades, surpassing economies such as Argentina, Brazil and Mexico.
He also stressed The value of solid institutions as a stability guarantor, and called to build political consensus to boost higher and higher growth.
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“Colombia has been doing well, but we can do it better. We cannot settle for 3.5 %. Why not aspire to 6 % or 7 % as Asian economies? Long -term vision is required, stability in the rules of the game and incentives for investment”he concluded.
Constance Gómez Guasca
Economy and Business Writing
