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3 Minutes to Read by 3 Minutes to Read by 3 Minutes to Read by 3 BOGOTA, Colombia (Reuters) – Colombia will seek to raise at least $3.97 billion through a new tax reform proposal to Congress, according to Finance Minister Jose Manuel Restrepo, as the administration seeks to shore up the country’s finances amid credit rating issues and rising debt. PHOTO FROM THE FILE: On January 30, 2020, Jose Manuel Restrepo, Colombia’s then-minister of trade, speaks with Reuters in Bogota, Colombia. REUTERS/File Photo/Luisa Gonzalez The 15.2 trillion peso target amount in the so-called social investment law is much less than the 23.4 trillion pesos ($6.12 billion) requested by the government in April, when demonstrations and legislator opposition prompted the bill’s withdrawal and Restrepo’s predecessor’s resignation. During a launch ceremony, Restrepo observed, “The first major consensus needs to be care for the vulnerable.” When the second legislative session of the year begins on July 20, the bill will be presented to Congress. The money obtained will be used to cover the fiscal deficit, shore up social services, and finance economic revival and job creation, he said. To fund social programs, the plan would raise 6.7 trillion pesos by increasing business income taxes by 5 percentage points to 35 percent starting in 2022. According to a document supplied by the president’s office, it would also codify 1.9 trillion pesos in annual public savings through cuts to government mobile phone, rent, and vehicle expenditures. The government intends to raise 2.7 trillion pesos through combating tax evasion, with the bill allowing it to better identify firm owners or beneficiaries so they can be punished, among other things. The amended law would change Colombia’s fiscal norm, which was enacted in 2011 to prevent the country’s public finances from deteriorating, to allow for new budgetary targets in the face of the country’s pandemic-driven debt surge. Colombia’s credit rating was recently downgraded to junk by ratings firms Standard & Poor’s and Fitch due to the inability to enact an earlier reform proposal, the expected growth in net public debt to 65.1 percent of GDP this year, and concerns about the country’s medium-term fiscal management. The government expects the budget deficit to reach about $25 billion this year, or 8.6% of GDP, before decreasing to 7% of GDP the next year. $3.824.08 Colombian pesos = $1 Nelson Bocanegra and Carlos Vargas contributed reporting; Oliver Griffin wrote the story; Julia Symmes Cobb, Leslie Adler, and Peter Cooney edited it./nRead More

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