‘Petro dividend tax would eliminate the country’s stock market’

'Petro dividend tax would eliminate the country's stock market'

The plan of government of Gustavo Petro of more than triple the tax on dividends could practically end the Colombian stock market, according to one of the largest investors in the country.

We are at a significant risk that the equity market will practically disappear“, said to Bloomberg Ricardo Jaramillo, Vice President of Business Development and Finance of Grupo de Inversiones Suramericana SA, a conglomerate that includes a pension fund manager.

(See: Prioritize education and access to water, changes that would be made to PGN 2023).

President Petro’s government sent its tax reform bill to Congress on its first day in office. Among other points, the proposal seeks raise taxes on the wealthiest citizens of the country in an attempt to finance social spending.

In another item, Petro’s plan treats dividends as ordinary income, effectively raising the tax to 39% for Colombians in the upper income bracket.

The current tax on dividends is 10%.

(See: ‘Let the banks finance production to create wealth’: Petro).

It also proposes a tax on windfall profits to oil and mining companies and a wealth tax.

Of course, it is likely that Congress will make changes to the bill before it becomes law.

The benchmark stock index Colcap Colombia has lost investors 54% over the last decade based on the US dollar, the worst performance among more than 90 primary stock market indices followed by Bloomberg.

Trading volumes are in a downward trend.

A series of public offerings launched by billionaire Jaime Gilinski for some of Colombia’s largest companies, including surah group, it has also reduced volumes by decreasing the number of shares available for trading.

(See: Petro’s ambitious reforms and limits imposed by the economy).

We are aware that we need to increase revenue for fiscal sustainability and to increase social investment“, commented, for his part, Gonzalo Pérez, president of Grupo Sura. “But there are some impacts on the capital market that must be studied“, he added.

And he assured that the group he leads would not be seriously affected by the tax bill.

Grupo Sura reported a profit of 558,000 million pesos ($126 million) in the second quarter of 2022, 30% more than in the same period of 2021, helped by earnings from its insurance and banking businesses.

(See: They suspended arrest warrants for ELN negotiators: what’s next).

The company’s business includes Sura Asset Management and Protection, one of the two main pension providers in Colombia.

BLOOMBERG

Source link

Previous Story

US Embassy denounces the repression against Nuevitas protesters

Latest from Colombia