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Tax Reform Vital for Colombia

Tax Reform Vital for ColombiaTax Reform Vital for Colombia

Colombia’s Finance Minister Mauricio Cardenas says winning congressional approval for a tax reform plan by year-end aimed at making up for revenue lost because of lower oil prices was his “number one priority.”

The country’s shock rejection a week ago of a peace deal President Juan Manuel Santos had negotiated with the Revolutionary Armed Forces of Colombia shook investors’ confidence, with many suggesting the tax package could now be delayed or watered down, Reuters reported.

The tax reform, which looks to hike revenue by between 1% and 2% of gross domestic product, is seen as crucial to preserving Colombia’s BBB investment grade credit rating and is also needed to fund anti-poverty programs, he said.

“This is my No. 1 priority, my No. 1 responsibility, and it’s a clear objective, not just for the government but also for the country as a whole, that we produce a tax bill consistent with keeping our BBB rating,” Cardenas said in an interview on the sidelines of the International Monetary Fund and World Bank fall meeting.

“It has to be in place by January 1,” he said. “We have to focus and concentrate on this.”

He underlined that the government had not altered or weakened its reform plan after the plebiscite defeat, although he acknowledged that it would inevitably be modified as it goes through Congress as has been the case with other tax bills.

Some investors have speculated that Santos’ low popularity ratings and the defeat of the peace deal would undermine his ability to win approval for the revenue-raising package.

 

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