Luis Jorge Garay, one of the men who has been advising the president-elect and his economic team, made projections on tax issues and indicated that the collection goal could reach 75 billion pesos.
In the midst of the work plans that the incoming government of Gustavo Petro has been carrying out, those focused on the economic sector have drawn attention, not only because of the behavior of the internal and external markets, but also because of the upcoming tax reform and the that they have stated should begin to be developed as a priority, as far as possible, during this same year.
In the government plan there is talk that the goal of collecting money is 50 billion pesos but, as confirmed by people trusted by President Petro, Parallel to this plan, studies are being carried out that reflect an estimate higher than that value, at 25 billion pesos, for a total of 75 billion.
This puts investors and businessmen on alert, since part of that collection will come from the dividends of the businessmen. That is to say, the profits generated by a company will not go to the pocket of the owner of the company in its entirety, but a part of them would remain in the great stock market to which the resources with which they plan to raise the billionaire sum will enter.
What Gustavo Petro’s economic team is betting on is that dividends be taxed, as is the case in developed countriesincluding the United States and some in Europe, where taxes must be paid on the earnings received.
This is something similar to what happens with the common citizen, who must pay withholding tax on the profits he receives from a business.
In fact, in the studies that Garay has carried out for the incoming government, in which he estimates that the goal can reach 75 billion pesos, he argues that Colombia is below the taxation average in relation to the Gross Domestic Product (GDP). ), according to statistics for Latin America.
Luis Jorge Garay has been one of Gustavo Petro’s advisers in the construction of the government program, some have even dared to say that he sounds like the Minister of Finance. He is an Industrial Engineer from the Universidad de los Andes, with a master’s degree and a doctorate in Economics. He earned a Ph.D. in Economics from the Massachusetts Institute of Technology, in States. He has been a researcher at universities such as Oxford and Cambridge, as well as the Inter-American Development Bank (IDB), and a consultant for some public entities.
To raise money it is necessary to tighten your pocket, which is why some Colombians fear, because they do not know if they will also have to contribute to collect such a high figure and wonder what will happen to taxes that directly affect their personal and family finances. For example, what will happen to VAT or four per thousand?
It should be remembered that WEEK interviewed Ricardo Bonilla, economic advisor to Gustavo Petro’s campaign, who revealed details of the tax reform that is being prepared. “There is no draft yet. The president-elect proposed a national agreement, so it is a question of agreeing on general aspects. What there are still are the campaign ideas that must be landed for the national agreement, ”he assured, and said that the tax is expected to be approved in December 2022.
Regarding the income tax, Bonilla said that the idea is to balance the burdens between companies and Colombians, since currently 80% of income from this tax comes from legal entities and only 20% is contributed by natural persons.
The economic adviser of Gustavo Petro’s campaign made it clear that the income tax threshold for natural persons will not be lowered. For example, Colombians who had gross income equal to or greater than 1,400 UVT ($ 50,831,000) in 2021 must declare income this year, although it must be borne in mind that declaring income does not always mean paying.
Also, in the income tax there will be another change, perhaps the most important, and it has to do with eliminating the card system, so that “everything goes to a single card and that card has the same rate, whatever the origin of the entry”.
What will happen to VAT?
Ricardo Bonilla was clear in saying that, for now, the VAT tax will not be touched. “We are not going to touch the basic basket, that is a clear red line,” he said, and recalled that the 2021 National Strike originated from the current government’s proposal to tax some products of the basic basket with this tax.
However, he assured that “the VAT tax must be given more time” and that the efforts of the economic team will be concentrated on income tax, equity and dividends.
And the 4 x 1000?
The 4 x 1000 was born as a temporary measure to deal with the banking crisis that the country was going through in 1998, but there is nothing more permanent than the temporary and this tax has already been in force for 24 years in Colombia.
Bonilla assured that, for now, this tax will continue to be maintained in Colombia, while a better solution is found. “If it’s removed, you don’t have to replace it. The suggestion to replace the 4 x 1000 is to increase the VAT rate by two or three points. we’re not going to do it”, he assured in conversation with WEEK.