A tax reform proposed by the Colombian government will benefit corporations at the expense of the country’s lower and middle classes, a leading opposition senator said.
According to Polo Democratico senator Jorge Robledo, the recently proposed tax reform is a sham.
“President [Juan Manuel] Santos is lying when he comes out and says that it is a progressive tax policy. It is a serious lie. He has said that those who earn more pay more, and those who earn less pay less. In Colombia, that is absolutely false,” Robledo told Colombia Reports.
“We want this to be a progressive reform…the higher the monthly income, the higher the rate,” Finance Minister Mauricio Cardenas told newspaper El Tiempo last week.
“That sounds good,” said Robledo, “but [their policy] is not progressive because it is [designed] to pay what the big companies do not pay.”
“This reform decreases the corporate income tax from 33% to 25% and according to government data, that will subtract $8 billion which they say they will get back,” said Robledo.
The corporate tax break Robledo is referring to is the proposed reduction of the payroll tax which the government claimed has made it difficult for companies to hire labor in Colombia.
According to Senator Robledo, this tax break for corporations will have to be made up by the lower and middle class, thus eliminating the progressiveness of the proposed reform.
According to the World Bank, the number of tax exemptions for corporations and private citizens grew 58% in Colombia over the last 12 years. Of this increase, 77% went to private companies. Income tax exemptions raise the Gini coefficient by 0.7% and cost the treasury close to 1% of GDP.
“With the reform we are proposing, not only will we not raise tax rates, but we will reduce and eliminate several of them,” said President Santos.
