The Government’s new tax reform, which bears the name of the financing law, has been one of the projects that has raised the most opinions. during Gustavo Petro’s administration.
(See: ‘We have enough votes to defeat tax reform’: Congress president)
The economic initiative It aims to raise $12 billion and according to Ricardo Bonilla, Minister of Finance, this will not touch VAT, nor will it lower the threshold for individuals filing income tax returns, nor will it tax the income of the lower, middle and upper-middle classes.
In an interview with Yamid Amat, in EL TIEMPO, The official stressed that the Financing Law aims to tax the super-rich, that is, those who earn more than $120 million per month. But he also estimated Colombian inflation for this year at 5.3%.
(Read also: Financing law would increase VAT on hybrid cars and end the Simple regime)
“Colombia’s public finances are not at their best and it is not because this Government has brought them to that situation. It is because we are paying the public financial debt. The Government went into debt in 2020 for $200 billion. In that year alone, the debt that was incorporated into the debt quota was US$12 billion.“s,” Bonilla clarified.
Ricardo Bonilla, Minister of Finance.
Mauricio Moreno/ Portfolio
Regarding plans with this project, The Minister stressed that the aim is to find the gaps in the tax structure where there is evasion and avoidance. For example, it has been seen that in online games of chance and luck, VAT is not being paid.
(Read more: How will the rise in diesel prices impact inflation figures? This is what the Ministry of Finance says)
“In the case of hybrid vehicle imports, they are fake hybrids, because they consume a lot of gasoline. We are only going to exempt electric vehicles. These are things like these that we are identifying in the financing law, which will fundamentally seek to reduce evasion and avoidance.“, he said.
Similarly, the head of the portfolio assured that The initiative needs to be completed with an investment of $12 billion, since that is the goal of economic recovery that the Government is working on.
(See: Inflation would be impacted by 2% with the $6,000 increase in diesel)
In response to criticism and proposals from some congressmen to not present the financing law and instead reduce public spending, Bonilla said that he has no way to cut resources because the spending budget is “absolutely” inflexible.
Colombian Economy
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“Should I cut the payroll? The Colombian State payroll is worth $60 billion. Half of that payroll is for the Army and the Police. Where am I going to cut? In the Judicial Branch? The country is crying out for less impunity and for there to be more acceleration in the definition processes. There has been no excess here.“, said.
(See more: They ask Congress to return the PGN 2025 project to the Government for modification)
Regarding the corporate income tax, he explained that it is being identified that this stimulus to lower the nominal rate of the tax It is a progressive process over the next five years, which will open up spaces each year for investment conditions to improve.
“There will be a reduction in the nominal rate of corporate income tax on all activities except oil and coal. In addition, wealth tax should only be paid on unproductive assets.“, he emphasized.
(Read: How is the pension reform going, after more than a month of being sanctioned by Petro?)
Colombian economy.
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Impacts of the truckers’ strike
Now, taking into account that the truckers’ strike affected a large part of the country’s economic sectors, Minister Bonilla reflected that It is still difficult to quantify the losseswhich “was undoubtedly quite a lot.”
In this regard, he said that in different studies it can be preliminarily estimated that The impact of unemployment could be around 0.1% of GDP in 2024. Similarly, food inflation was also affected. Prices of perishable foods showed an average increase of 36%.
(See: Budget 2025: What would happen if the Government and Congress do not correct the underfunding?)
He added that the diesel price adjustment announced last week would have allowed generate fiscal savings for the country in the order of $1.5 trillion in 2024 and $4.2 trillion in 2025. “The agreement with the transporters means that these aforementioned savings are reduced, and now they are only $360 billion in 2024 and $1.7 trillion in 2025. In other words, this agreement reduced the projected tax savings by about 70% on average.“, he said.
Finally, he explained that if the value of this fuel had been adjusted with the inflation of 2020, today we would be talking about a cost of $13,200 per gallon.That is, we have a diesel price that has not been brought close to the level of inflation and has grown well below the rest of the prices in the economy.“, he mentioned.
(Read more: Ecopetrol obtained approval for a US$250 million loan for investment and debt)
For this reason, the estimated deficit of this year’s Fuel Stabilization Fund by ACPM is $11.6 billion, which means almost a billion pesos per month.
