The Colombian Congress has approved a tax reform aimed at taxing the richest as well as the oil sector, one of the emblematic projects of leftist President Gustavo Petro, we learned Thursday, November 17 from an official source.
The final bill, negotiated between the Senate and the House of Representatives, was approved in plenary successively by the two Chambers on Wednesday and Thursday, Interior Minister Alfons Prada announced. “The Government of Change offers the country a gradual and equitable reform that will lead us to the path of total peace and equity”, welcomed Alfons Prada, also government spokesperson, on Twitter. The new law is now “ready to be signed” by President Petro to enter into force, he added.
It provides for 20,000 billion pesos ($4 billion) in additional revenue for 2023 (i.e. 1.7% of GDP), which will be devoted to social investments. She hears “breaking the inertia of the imbalance that makes Colombia one of the 10 most unequal countries on the planet”explained the Ministry of Finance in a press release. “For the first time in several decades, we are talking about taxing the wealthiest sectors of the population to finance expenditures and investments in favor of the poorest people in the country”commented in the aftermath of President Petro, while participating in a military ceremony.
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“One of the most unequal countries on the planet”
Parliament showed “that he is at the service of those who need it most”welcomed the Head of State, seeing in this new tax law a “path to justice so that Colombia is no longer one of the most unequal countries on the planet”. The reform plans to tax more heavily people whose monthly income is more than ten times the minimum wage (which is $200). It imposes new taxes on the oil (+15%), mining (+10% on coal) and energy sectors, with 11,000 billion pesos in new revenue that will now come from these sectors.
President Petro had made this subject a political hobbyhorse, as he intends to lead the country towards energy transition and a carbon-free economy. The text has given rise to a long standoff with Colombian business and employers, who claim that the viability of these sectors (representing 57% of Colombia’s exports) is threatened. President Petro’s initial plan was to raise up to 25 trillion pesos. But during the legislative process, the government had to make several concessions.