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Colombia government sends $3.9 bln tax reform to congress amid renewed protests

3 minute read

BOGOTA, July 20 (Reuters) - Colombia's government on Tuesday formally presented a $3.95 billion tax reform bill to congress, even as unions and student groups sought to revive the street protests that helped scupper the reform's original iteration.

The law would raise 15.2 trillion pesos per year, significantly less than the 23.4 trillion pesos sought by the government in an April proposal that was later withdrawn amid sometimes-deadly protests and lawmaker opposition.

The government of President Ivan Duque insists the law is vital at a time of rising debt and an expanding fiscal deficit and must be passed to shore up social programs and allay investor fears about Colombia's medium-term fiscal management.

"The social investment law, which we will build between all of us, is the largest jump in human development in recent decades," Duque told lawmakers as he opened congress's second legislative period of the year on Colombia's Independence Day.

Standard & Poor's and Fitch have already cut Colombia's credit rating to junk.

The bill would increase businesses' taxes by 4 percentage points to 35% from 2022, raising some 6.7 trillion pesos.

It would raise another 2.7 trillion pesos by fighting evasion and enshrine 1.9 trillion pesos in public spending cuts, among other measures.

The finance ministry has emphasized the bill will not affect most taxpayers, after a proposed increase in sales tax in the April version drew special ire.

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A demonstrator waves a flag during an anti-government march demanding changes to the social and economic policies, during Colombia's Independence Day, in Bogota, Colombia July 20, 2021. REUTER/Nathalia Angarita

Protesters who gathered in Bogotá voiced skepticism about government promises to reform the police and improve opportunities for young people, including a 25% minimum wage subsidy for companies that hire 18 to 28 year olds, a provision in the tax reform.

"What's lacking is for them to listen to us. We're not criminals for going out into the streets to ask for our rights," said Antonio Montes, 24, a baker. Behind him, a band played on a temporary stage and vendors hawked snacks, soft drinks and beer.

Several thousand people were gathered at 23 protest locations in the capital, the Bogota mayor's office said.

"How can it be fair that they buy weapons with our taxes to kill regular people? We came out to support young people," said Alicia, 68, a retired ministry of education worker.

A spate of mass protests began on April 28 and lasted some six weeks, occasionally turning violent.

The attorney general's office has directly linked more than two dozen deaths to the demonstrations, while rights groups say they have confirmed many more.

Major unions have said they will propose 10 reforms to congress, including the creation of a basic income.

($1 = 3,842.97 Colombian pesos)

Reporting by Julia Symmes Cobb; Editing by Steve Orlofsky and Howard Goller

Our Standards: The Thomson Reuters Trust Principles.

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