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News > Latin America

Colombia's Duque Expands Taxes to Lower Classes, Breaking Campaign Promise

  • Colombia's Government has announced a new tax structure. President Ivan Duque during the swearing-in ceremony, August 7, 2018.

    Colombia's Government has announced a new tax structure. President Ivan Duque during the swearing-in ceremony, August 7, 2018. | Photo: Reuters

Published 20 August 2018
Opinion

"I do want to do the tax reform that allows us to lower taxes so that this economy recovers," said the then-presidential candidate Ivan Duque on May 15.

During his first public meeting with business representatives, Colombian Finance Minister Alberto Carrasquilla announced a tax reduction for companies in order to "increase competition, formal employment and to boost entrepreneurship," as part of the economic reactivation plan of the Duque administration, which will also see the government imposing an income tax on people making less in monthly salaries. 

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These declarations prompted applause from the business sector audience. It has also created an uproar in social media and opposition sectors as the minister explained that in order to achieve this target the country must change the tributary system to one tuned with the international standards, in which the middle class "must be part of the solution."

"In the United States, the income tax is contributed by 85 percent by natural persons and by 15 percent by companies, while in Colombia the opposite happens," explained Carrasquilla in comments that made people angry on social media, as one of Duque's most important campaign slogans, was "Fewer Taxes, More Minimal Wage For A Solidary Country."

The Finance Minister announced that the new Colombian government is evaluating the possibility of increasing the number of people that contribute with taxes, which will allow lowering taxes on companies. The measure will allow charging over 4.5 million people with Income Taxes, instead of the 2.6 million people that are currently paying this specific tax.

Right now people who pay Income Taxes are those who earn 3.5 million Colombian Pesos (US$1156) and with the reform people with incomes over 1.9 million Colombian Pesos (US$627), which is the average income in Colombia, would have to pay income tax as well.

On May, 15, the then-presidential candidate of the Uribe camp, Ivan Duque said "What Colombia needs now is a reform to the public administration, a reform to expenses that eliminates unnecessary expenses, to face the corruption and the evasion, to generate the savings that allow us also to lower the VAT (...) I do want to do the tax reform that allows us to lower taxes so that this economy recovers."

The new Colombian government, that came to power on Aug. 7, has already been challenged on several occasions. First, the new Defense Minister Guillermo Botero announced the plan to “regulate” anti-government protests by only allowing demonstrations if they are previously approved by authorities.

Afterward, the Southwestern bloc of the Colombian narco-paramilitary group Aguilas Negras, or Black Eagles, issued a flyer on Aug. 9, endorsing the government of president Ivan Duque.

Another outrage was sparked over the appointment of former president of the Senate Nancy Patricia Gutierrez as the minister of the interior, who was investigated by Colombia’s Supreme Court for links to paramilitary groups in 2008. Among other incidents that have sparked the concerns of several social and political organizations in Colombia.

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