confirm that it will be filed this August 8 in the morning – Up Jobs News

The tax reform will begin its course in the Congress of the Republic, after it is filed this Monday morning, as confirmed by several spokesmen for President Gustavo Petro’s cabinet, after taking office.

A brief and concise article, which does not imply that its content cannot be powerful, is what the experts have said works best for the processing of a tax reform in the Congress of the Republic. However, the one that the government of President Gustavo Petro will file on Monday, August 8, already has 80 articles and the adjustments continue until the last moment.

Although it is true that the reform is already there, the first of at least 15 that this administration could have on the agenda, is particularly ambitious in obtaining income, the number of regulations could complicate the study, debate and approval of the initiative, which is key to obtaining additional resources, in the face of a high demand for financing.

The points that are already included in the articles and that are immovable –because they must coincide with the campaign promises– They could be the least controversial, since they have been tested, being thrown into the air to take the temperature of their receptivity. However, in the detail of the articles could be ‘the devil’.

About rent to people

This is the case of the income tax for natural persons, which will not affect the middle class, but rather will squeeze income above 10 million pesos. The expectation is in the rates that will be imposed, which must be adjusted to the principle of progressivity. Currently, these rates start at zero and increase, depending on income, to 19, 28, 33, 35, 37 and 39%.

Although the existence of so many rates gives the idea that this tax is applied progressively, in practice this is not the case, which is due to the number of exemptions, discounts, exclusions that are contemplated in the Tax Statute. For this reason, one of the bets of the Minister of Finance, José Antonio Ocampo, is to remove benefits, which could end up indirectly affecting the middle class.

Soda and sausage

Healthy taxes are others that will enter the articles of the reform. Sugary drinks and ultra-processed foods are the ones in the spotlight.

In Colombia, several attempts have been made to tax products that affect health. The most recent was in 2019, when a bill was processed in this regard, which established that the collection achieved It should have a specific destination, and it was the financing of chronic disease programs, based on the fact that these foods are responsible for conditions such as diabetes, obesity and the like, which cause a high demand for hospital care services and require medication of for life, financed through insurance plans. In other words, the consumption of these foods causes strong pressure on health spending.

At that time, ultra-processed products were defined as those containing fats, oils, starches and sugars.

If you get an extra money

In the tax reform will also be included a higher tax for occasional profit. This measure would include income received for one time, such as remittances, lottery prizes, inheritance and profit from an investment in shares (if it is not the main economic activity of the recipient).

heritage returns

The wealth tax in Colombia is one of those taxes that comes and goes. Its first appearance dates back to 1935, but the regulations that must be brought to the present are those of 2014. During the first term of Álvaro Uribe, it was applied through a decree of internal commotion, for the only time, to finance democratic security.

It is key to take into account what happened in 2014, since in the tax reform the wealth tax is retaken, under the conditions that have traditionally been applied in the country. This is how, as of 2015, the subjects called to contribute it were natural persons, legal entities and de facto companies. Assets exceeding 1,000 million pesos were taxed, but different percentages were applied for collection, depending on whether it was a natural or legal person.

And how are the companies?

In the country, Unemployment stood at 11.3% in June, so companies will have income tax relief to create jobs. Currently, the rate they will pay for the taxable year 2022 is 35%, because they were the ones who raised their hands during the pandemic, to assume a greater tax burden and thus stop the social explosion that occurred in the middle of a reform that sought to touch vulnerable classes through taxes such as VAT and rent.

The taxation of companies, in the Petro reform, will be focused on promoting productivity and stimulating job creation, with which there will be a reduction in rates, mainly for small companies; but also ‘stick’, with the elimination of tax benefits when the reason for which they were introduced is not fulfilled, as is the case of free zones. The companies that operate in these production areas left them a 20% tax rate, but for them to export, so if they don’t, they would lose the benefit.

platforms

In the Colombian tax system, digital platforms will be other calls to contribute more.

In fact, the arrival of the pandemic that locked up the population, promoted the increase in teleworking, electronic commerce, digital banking, transportation through appsthe streaming, private television. Until now, the payment to platforms would be given by sales margin in the country.

It must be remembered that, from 2021, The OECD made a recommendation to the world, on the application of a global minimum tax of 15% on incometo platforms that invoice more than 760 million dollars a year.

atmosphere in congress

Until now, the processing of a tax reform in the Congress of the Republic is one of the most complex. Even more so if on this occasion the intention is to obtain at least twice the highest value that a government has achieved with a tax.

The economic team in the administration of Petro initially spoke of 50 billion pesos, a figure that has moderated, at least in the first year, to the extent that the economy shows signs of a sharp slowdown by 2023. In fact, the Dane released the inflation data for July, according to which the consumer price index had a variation of 10.21%, the highest of all so far this century.

If we manage to raise at least 25 billion pesos in the first year, The task of obtaining more resources will have to be titanic, because the country has a projected fiscal deficit of 5.6%, to which is added the gap that was formed with the financing of the deficit from the Fuel Price Stabilization Fund. , with which the former Minister of Finance, Mauricio Cárdenas, estimates that there would be a shortfall of close to 7% of GDP, something he classified as ‘unsustainable’.

Covering the gap in public finances, driven by the high demand for resources during the pandemic, and covering the expenses that the implementation of Petro’s government plan, focused on social and productive matters, will demand, are the two compelling reasons for the tax reform, which, in order to be approved before the end of the year, should carry a message of urgency (only two of the four debates that a law usually requires to be approved). However, this week it was learned that it will be processed as an ordinary law without an urgent message (four debates).

Several congressmen, including members of political parties that are not from the political coalition that surrounds the Government, have said that there is a good atmosphere, but that they do not rule out controversies, which will depend on how aggressive the specific measures that are included in the proposal.

It is well known that at the beginning of a government there is a kind of ‘honeymoon’ between the Executive and the Legislative, and even more so now, since the presidency of the two chambers of the Congress of the Republic are headed by members of the Historical Pact. For this reason, former President Ernesto Samper recommended that “this initial political capital should be spent on at least three of the reforms that President Petro will carry out: agrarian, political and tax reforms.”