This is how the tax reform was carried out, the greatest success but also the biggest headache of the first 100 days of Gustavo Petro

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The economic initiative, which has as its goal a collection of 20 billion pesos, suffered several modifications, different attacks and even a threat of collapse at the last minute because of the taxes on the churches; This is how the Government achieved what is considered the greatest achievement of its first 100 days

This is how the tax reform was carried out, the greatest success but also the biggest headache of the first 100 days of Gustavo Petro

The first bill filed in the Congress of the Republic by Gustavo Petro, president of Colombia, was the tax reform. Photo: Presidency of the Republic

One ​​of the most controversial points of the Government of Gustavo Petro in the first 100 days of his mandate, without a doubt, is the project of tax reform, debated and reconciled in the Congress of the Republic.

Among other details, the controversy began before Petro came to power, since during the campaign he announced that said project was necessary and would have a collection goal of 50 billion pesos and that the 4,000 richest in Colombia would be the ones to make that contribution through taxes. Even the figure of 75 billion pesos was touched.

“The 50 trillion pesos that are needed will not be collected at once, but rather gradually. We hope that they will be generated gradually, I will give an example, we can start with 25 or 30, and gradually it will increase,” said the current Minister of Finance, José Antonio Ocampo, last July, when he was still appointed.

< p class="paragraph">However, neither of these things was fulfilled. When he presented himself on August 8 at the Congress of the Republic with an urgent message, just one day after Petro's inauguration as president, the fundraising goal was 25 billion pesos, but after discussions in the debates the figure dropped to 20 billion pesos, which would be for social investment, and all Colombians will contribute.

Thus, the initiative continued its course and was debated in the first days of October in the economic commissions of the Senate and Chamber, prior to the debates in the plenary sessions.

Upon learning of the text in full and detailing it, several guilds made strong criticism. For example, the Andi, the Acp and the Cámara Colombo AmericanaThey argued that it would hit the investment, by increasing the income tax for companies from 30% to 35% and by establishing the non-deductibility of taxes through royalties.

Faced with criticism, on October 9 Ocampo told El Tiempo that he did not understand why the oil companies and the coal industry do not want to get their hands on the “denim” if they are in the midst of a “boom ” in terms of sales, especially when the money that is requested from them is to help the less favored population of the country.

For its part, FenalcoHe warned that the tax on sugary drinks and ultra-processed foods would impact inflation upwards, because everything would be more expensive as soon as said tax began to be collected. In addition, close to 250,000 neighborhood stores could disappear in the country if the tax on sugary drinks and ultra-processed foods contemplated in the tax reform were to be approved.

Despite this, the Government lowered the decibels to the concern. The Finance Minister explained that Said tax would only impact inflation by 0.27 points in 2023, which will be minimal for the bulk of the population.

Before the debate, the president of Andi , Bruce Mac Master, questioned the Executive about royalties and income taxes.

Mac Master asked the legislators to give great importance to various points related to royalties and thus define whether these taxes “are about payment for a good of the nation” or, on the contrary, “if the payment for the use or usufruct of a national asset was an expense.”

Furthermore, in response to the controversy over taxes on hydrocarbons and the announcement that no there will be more exploration of them in the country, the president of Andi assured that without a doubt, all products from the subsoil are protected by the Constitution, which says that they are property of the nation and that should not be a question that should not keep Colombians up all night for a second.

He also assured that regarding the issue of the royalties, there are several issues that congressmen should analyze so as not to affect those amounts.

In this line, the businessman suggested that whoever exploits hydrocarbons takes a part of what it receives as income and simply takes it as a transfer to the State. With this, he raised how, in his opinion, the matter could be solved.

Senator Miguel Uribe asserted that with this article the dollar will continue to rise.

“The mining-energy sector continues to be persecuted . Colombia, after Zambia, will be the second country in the world that does not allow the deductibility of royalties and the only one in the OECD. It's going to go very badly for us Colombians with Petro,” the senator warned at the beginning of last November.

In the midst of everything, The Colombian Food Bank Network (Abaco) warned on October 6 that the tax reform imposed a tax on food and beverage donations, which would impact one million beneficiaries. This, of course, was taken into consideration by the Government and the reform rapporteurs, agreed and ended up modified so as not to affect said population.

Days without VAT

The project has undergone certain modifications, but one of the most famous reversals of the Government in terms of the reform was the days without VAT, the days in which you could buy products without including the tax 19%. These, in the first place, had been discarded by the Petro government because it considered that they benefited the international industry.

However, on October 3 it was reported that they would be made, but for domestic productsand would be included in the tax reform. Despite this, on October 4 the Ministry of Finance announced that an agreement had been reached not to include them in the bill.

Despite the Gustavo Petro's decision, Fenalco revealed on October 13 a survey that showed as a main result that 84% of Colombians want the days without VAT to be maintained.

Pull and pull of political parties

Facing the second debate, on November 2 and 3, there were more controversies. One of them, with respect to the political parties, mainly the Liberal Party. They had a tug of war over the role they would play. On the one hand, Cambio Radical and the Centro Democrático stated from the outset that they would vote against it, considering that it scares away investment, hits Colombians' pockets and generates more poverty.

< p class="paragraph">Even Centro Democrático, before the first debate, presented a negative paper against the bill. In this they argued, among other things, a considerable increase in the price of food, but said presentation was denied by the Congress of the Republic.

< b>Historical Pact, the Conservative Party, Comunes and Green Alliance always supported the economic initiative, different from the Liberal Party, which initially reported that it supported the reform, but weeks before debating it, through the former president Cesar Gaviria, one of its leaders, expressed discontent and in several meetings they discussed various points of it.

Then, one day before the second debate, the Liberals decided that they would vote in favor, but with the condition of withdrawing the article on the non-deductibility of royalties. However, this was approved, as it is one of the most important for its collection.

“This does not have an article to defend, not one. There is not an article that one says: 'this must be fought for', nothing. They only do damage, damage and damage,” the former president asserted in one of the meetings held.

Despite this, the reform was approved in second debate on November 3 and after this the minister was very pleased with the work done, and even went so far as to thank all the corporations for their approval, and although it did not manage to approve it in its entirety, it was the first major battle of the current government, which In the words of the same official, it will be a key tool to achieve the development of social programs, equality and justice.

However, on November 6 it was learned that, according to The Wall Street Journal, several US oil companies would sue the Petro government for the tax reform, due to “a breach of contract and a violation of the free trade agreement between the two countries”.

< h2 class="header">Conciliation

In the Congress of the Republic the conciliation of the articles is still awaited. It was expected that it would take place last week, but there are taxes that have not yet been approved by the Senate and House and there are details to be corrected in the approved text.

Thus, it is expected that there will be a conciliation next week and the approval of the project to which Minister Ocampo dedicated more than 400 hours of discussion with the public and private sectors will not be delayed.< /p>