By Salomón Kalmanovitz, EL ESPECTADOR, September 5, 2022
(Translated by Eunice Gibson, CSN Volunteer Translator)
Tribulation means “anguish, sorrow, torment, or moral affliction,” we are told by the Dictionary of the Royal Academy. Taxes, for their part, carry the sense of vassalage and submission to authority; nobody likes to pay them, and even less to pay them to those who are subjugating others.
The tax reform bill designed by Minister José Antonio Ocampo attempts to eliminate many of the unjustified benefits that have resulted from political influences and cronyism and the legislature’s own inertia. Among those you could count the exemption for 30 years of the tax on the income of hotels that build or remodel, many of which are owned by international chains like Sheraton, Hilton, Holiday Inn, Ibis (an affiliate of the Accar Group) and the Dann, which are national.
The bill would also end the preferences for the so-called “orange economy”, favored by a whimsy of ex-President Duque, and which could include too many activities that don’t do society much good. The benefits maintained for 37 years on real estate transactions in the Armero region would also go away. The region has been recovered from its tragedy for more than 20 years. The coffee growers will finally pay their share; the 40% discount on their liquid income that gives them credit for their “support” of the employment of their day laborers will end.
In addition, businesses will no longer be able to discount on their tax returns the contributions they make to their employees for mutual funds invested or for the administration of their pension (AFP) funds. This would affect the Sarmiento Angulo Groups and also Sura. There’s no reason to subsidize owners and employees with public funds. Those funds could go in a contrary direction and support sectors that are less protected.
In the same way, there are hundreds of tripartite benefits that apply to private sectors, and they felt offended when they saw them threatened. But that is one of the reasons why the tax revenue in this country is so paltry, only 14.7% of GDP in 2021. Compare this with the average for Latin America, which is 20%, for the United States, which is 25.5%, and for Spain, which is more than 37% of GDP, or it will be when they get serious about joining the European Community of Nations.
A controversial proposal in the reform bill is the one about the health taxes that are intended to reduce consumption of sugary beverages and ultra-processed foods, which contribute to illnesses like diabetes and also to obesity. The defenders of such consumption, the large sugar mills, argue that the poor eat what they like best, not caring that it increases morbidity for them. Making those products more expensive will hurt people’s pocketbooks, but it’s as your mother tells you, for your own good.
In the carnival of tax exemptions, the financial and insurance accruals that were requested in 2021on exempt income, for a total of 7 billón pesos (roughly USD $1,590,000,000 at today’s rates), and for the energy and gas industry, for nearly 5 billón pesos (roughly USD $1,135,000,000 at today’s rates). These sectors are very profitable, and there is no reason to favor them with funds out of the national budget. The DIAN (National Directorate of Taxes and Customs) has explained that in this year, the income exemptions that have been granted to private businesses had a fiscal cost of 6.7 billón pesos (roughly USD $1,521,000,000), money that could have been used to attend to urgent social necessities.
The tribulations of the tax reform bill are intensifying, with all of the affected interests fighting to maintain their privileges.