What fiscal implications could the approval of the SGP reform have?

The reform to General Participation System (SGP) passed his test in Congress. The bill, which seeks to gradually increase the resources allocated to the departments, will now go to conciliation.

(Read more: Chamber denies filing of the project to reform the Participation System)

Since its conception, the initiative has been the subject of criticism from some voices, including that of the representative to the Chamber, Katherine Miranda. In an interview with EL TIEMPO, The congresswoman explained what implications its approval would have.

According to Miranda, although it is necessary to focus on decentralization to close gaps, he considers that having given the green light to the SGP reform is “irresponsible”, considering the fiscal effects that its implementation would entail.

“What the Autonomous Committee of the Fiscal Rule has said and the response it gave me through the right of petition from the Ministry of Finance, defines to me that this constitutional reform would imply nine tax reforms“he explained.

The legislator explained that, in this context, the bill could “break” the Fiscal Framework as a result of its incompatibility. “This is what all the experts and even officials within the government itself have said. We are saying that for next year we will have a budget of 523 billion pesos, where 91 percent is already inflexible”he added.

(See: What’s coming for the SGP reform after its approval in Congress)

(See: ‘It’s the most irresponsible thing I’ve ever seen’: Katherine Miranda, on SGP reform)

Along the same lines, he pointed out that, although it was possible to agree in the debate that the entry into force of the norm is subject to the issuance of a powers lawnot all municipalities are capable of assuming the increase.

“By approving this law, approving the next powers law, additional resources will necessarily have to be sought, which would imply tax reform for our country. This approval of a legislative act takes for granted the approval of tax reforms against all Colombians”he indicated.

Considering all of the above, the representative also mentioned that, after the presidential sanction, the regulations could face “rain” of lawsuits against the legislative act.

To read the full interview, click here.

(Read more: National Police draws up its 2025 Roadmap: this is how its operation will work next year)

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