Colombia’s President withdraws controversial tax reform bill that sparked protests

RIO DE JANEIRO, BRAZIL – Colombian President Iván Duque, announced this Sunday the withdrawal of the tax reform bill submitted to Congress last April 15, which triggered the social protests and unrest the last four days in the country.

“I request the Congress of the Republic to withdraw the bill submitted by the Ministry of Finance and to urgently process a new bill as a result of consensus and thus avoid financial uncertainty,” Duque said in a statement at the Casa de Nariño, the seat of government.

The head of state’s decision comes after the massive four-day protests against this initiative left at least five people dead. However, some social organizations claim that there are more dead.

Duque explained that he spoke with the different political parties, labor unions, and other population sectors. The new tax reform bill to be submitted to Congress will include the proposals that came out of these dialogues.

In this sense, he indicated that the project would incorporate a temporary income surtax for companies, extend the wealth tax temporarily, increase the tax on dividends temporarily and create an income surtax for people with higher incomes, among others.

“The reform is not a whim. The reform is a necessity. To withdraw it or not was not the discussion. The real discussion is to be able to guarantee the continuity of social programs,” he said.

Among these, he mentioned the extension of the Solidarity Income, which today benefits more than 3.4 million households, and offering free university education to young university students from the lowest social strata.

Duque emphasized that he also seeks to extend the payroll subsidy through the Formal Employment Support Program (PAEF) that “has benefited about 3.5 million workers”.

Likewise, he said that the Value Added Tax (VAT) should continue to be refunded to “the most vulnerable households”.

The original proposal included the broadening of the tax base to include those who earn the least among those who pay taxes and to levy the 19% VAT on public services for the middle and upper classes, among other measures that were the trigger for protests throughout the country.

In the city of Cali, the demonstrations ended in acts of vandalism against public transport, banks and stores, and even against ambulances.

“The path of a consensus clears perceptions and allows us to say clearly that there will be no VAT increase for goods and services nor will the existing rules be changed. It is also clear that no one who does not pay income tax will pay this tax,” the president stressed today.

Source: efe

For the full picture, see our Brazil Tax Reform: Complete Guide.