Colombia To Present New $2.86 Billion Tax Reform Proposal To Congress

The Colombian government is set to introduce a fresh tax reform proposal to Congress in a bid to raise at least 12 trillion pesos ($2.86 billion) to finance its budget, Finance Minister Diego Guevara announced on Thursday. The move follows the rejection of a similar reform last year, which left the government scrambling to cut spending. 

Speaking in an interview with local radio station Caracol, Guevara indicated that the new proposal could seek even more funds to ensure financial stability. “It is no secret that there is significant tax pressure this year,” he said, emphasising the urgent need for additional resources. President Gustavo Petro has reportedly instructed his administration to push forward with a revised tax plan. 

Last year’s failed proposal aimed to generate 9.8 trillion pesos but faced resistance in Congress, forcing the government to slash its budget to approximately 511 trillion pesos. Despite these cuts, Colombia’s spending remains 40 trillion pesos over the fiscal limit, according to the country’s autonomous fiscal rule committee (CARF). 

The upcoming reform is expected to revive some previously rejected measures, including tax relief for small and medium-sized businesses while introducing new taxes on sectors such as mining and energy. Guevara noted that the government is still in the early stages of drafting the proposal but reaffirmed that the baseline target remains 12 trillion pesos, with the possibility of increasing the amount. 

We’re still in the initial stage (of planning the new proposal),” Guevara said. “The baseline will be 12 trillion pesos (raised), but we may aim for a bit more to ensure stability this year and in the longer term.”

However, with limited congressional support, Petro’s administration faces an uphill battle in securing approval for the tax reform. The outcome of this proposal will be crucial in determining Colombia’s fiscal strategy for the year ahead.

Melissa Enoch

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