ColombianTax Bill Rubbished By Finance Minister

by Mike Godfrey, Tax-News.com, New York

26 October 2001

Colombia's Finance Minister, Juan Manuel Santos, has told reporters that a bill to allocate more tax money to social spending could cost the government $1.2 billion if it is approved by Congress and this will pressure the next government to impose radical cuts - President Andres Pastrana's administration ends next summer.

However, the bill is on its way to becoming law; already Congress has participated in six debates to vote for the 'Social VAT bill' which would see more money spent on health, housing and education and divert 25 per cent of VAT to help small towns and native Indian settlements. There are just two debates left before the bill will be approved and they will be conducted by the opposition Liberal Party-controlled Chamber of Representatives.

'If that legislative bill is approved, then Congress will simply be decreeing a drastic tax reform for the next government. Because there's nowhere to get the money from for the so-called Social VAT,' said the minister.

In the first eight months of this year, the Colombian government earned $5.4 billion from 'internal taxes' including VAT (16 per cent on goods and services) which is up 34 per cent from the same period last year.

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