Amid Protests, Colombia Proposes a More Palatable Tax Reform
MIN READJul 22, 2021 | 21:50 GMT
Protesters gather in the streets of Bogota, Colombia, on July 20, 2021.
(Diego Cuevas/Vizzor Image/Getty Images)
Compared with its controversial predecessor, Colombia’s updated tax reform proposal is less likely to trigger mass unrest and more likely to pass in Congress since the changes shift more of the burden onto corporations. If the new draft is approved, the boost to domestic consumption would outweigh any loss of foreign investment due to the higher corporate tax rate. On July 20, Colombia’s government sent a revised version of a $3.95 billion tax reform bill to Congress. Initial reforms, proposed on April 15, sought to raise Colombia’s value-added tax (VAT) and expand the country’s tax base by lowering the minimum annual income required to pay taxes to fund public debt. The new draft, however, shifts the majority of the tax burden onto corporate firms in the country by raising Colombia’s corporate income tax rate of 30% (already one of the highest in the world) to 35% by 2022. If approved,...