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News > Latin America

Colombia: Tax Hikes to Hit Poor, Working Class Families

  • Colombian President Ivan Duque.

    Colombian President Ivan Duque. | Photo: Reuters

Published 24 August 2018

Colombia's Finance Minister Alberto Carrasquilla admitted tax cuts would only be applied to corporations.

Colombia's newly-appointed finance minister, Alberto Carrasquilla, just one week after proposing to tax lower class incomes, has proposed to introduce a new sales tax on essential food products.

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The poor and more than 50 percent of working-class Colombians who earn the monthly minimum wage of approximately USD$264 will be hit hardest by the recently announced taxes if they are implemented. Their cost of living consists almost entirely of the products that are currently exempt from sales tax to avoid endangering their quality of life, according to Colombia Reports.

Colombia's President Ivan Duque vowed tax reform before his election in June. The tax reform plan, however, is not consistent with his promise of lower taxes and higher wages for minimum wage workers.

The measures, therefore, are likely to face stiff resistance. If passed more than half of the country's population will see their cost of living rise.

Last week, Carrasquilla admitted that the government intends to lower taxes, but only for corporations. The minister noted that citizens were earning wages higher than USD$623, instead of the current threshold of USD$1,200.

Duque and Carrasquilla were former employees at the Inter-American Development Bank. The newly-elected president has neither condemned or defended his minister's controversial tax reform plan. His party, however, appears to favor the tax hike.

Carrasquilla previously served as Colombia's finance minister between 2003 and 2007, a period in which extreme poverty increased.

He once called the Choco province, which predominantly populated by Afro-Colombians and Indigenous persons, a “burden” on the rest of the country.

He has also been quoted as saying the country's minimum wage is “ridiculously high.”

The former investment banker turned politician was cited in the 2015 Panama Papers, which showed his role in funneling financial assets to offshore tax havens.

In 2016, Juan Ricardo Orta, the former director of the National Directorate of Taxes and Customs, said Carrasquilla and other members of the country’s elite were hiding more than $100 billion from their office.

Last week, El Tiempo newspaper accused Carrasquilla of tax evasion totaling USD$40 billion.

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