Colombia’s revised tax measure will look to boost practically $4 billion -finance minister

Jose Manuel Restrepo, then Colombia’s minister of commerce, speaks throughout an interview with Reuters in Bogota, Colombia January 30, 2020. REUTERS/Luisa Gonzalez/File Photograph

BOGOTA, July 13 (Reuters) – Colombia will search to boost not less than $3.97 billion by a brand new tax reform measure to be proposed to Congress, Finance Minister Jose Manuel Restrepo stated on Tuesday, as the federal government seems to be to shore up the nation’s funds amid credit standing troubles and rising debt.

The 15.2 trillion peso goal sum within the so-called social funding legislation is considerably decrease than the 23.4 trillion pesos ($6.12 billion) sought by the federal government in April, earlier than protests and lawmaker opposition compelled that invoice’s withdrawal and the resignation of Restrepo’s predecessor.

“The primary nice consensus needs to be concern for the weak,” Restrepo stated throughout a launch occasion.

The invoice shall be offered to Congress when the second legislative interval of the yr begins on July 20.

Funds raised by the measure shall be used to cowl the fiscal deficit and shore up social packages in addition to finance financial restoration and employment, he stated.

The invoice would enhance companies’ revenue taxesby 5 share factors to 35% from 2022 to finance social packages, elevating some 6.7 trillion pesos.

It might additionally enshrine 1.9 trillion pesos a yr in public financial savings by way of cuts to authorities mobile-phone, hire and automobile prices, based on a doc shared by the president’s workplace.

The federal government hopes some 2.7 trillion pesos shall be raised by preventing tax evasion, with the invoice enabling it to higher monitor homeowners or beneficiaries of companies to allow them to be charged, amongst different measures.

The up to date legislation would modify Colombia’s fiscal rule – a measure imposed in 2011 to stop the deterioration of public funds – to permit new fiscal targets amid the nation’s pandemic-motivated enhance in debt.

The failure to cross the sooner reform proposal, the anticipated enhance in web public debt to 65.1% of GDP this yr and doubts about Colombia’s medium-term fiscal administration just lately led scores companies Commonplace & Poor’s and Fitch to chop its credit standing to junk.

The federal government estimates the fiscal deficit this yr will attain practically $25 billion, equal to eight.6% of GDP, earlier than declining to 7% of GDP subsequent yr.

($1 = 3,824.08 Colombian pesos)

Reporting by Nelson Bocanegra and Carlos Vargas; Writing by Oliver Griffin; Modifying by Julia Symmes Cobb, Leslie Adler and Peter Cooney

Our Requirements: The Thomson Reuters Belief Rules.

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