Colombia’s former Vice President and current presidential candidate, Germán Vargas Lleras outlined a proposal today for tax reform in the Andean nation. The proposal is the centerpiece of the candidate’s campaign in the forthcoming presidential election.
The proposal contains 25 recommendations, one for each week until the election, intended to stabilize an economy that has faltered in recent years with an increase in spending and a significant drop in tax revenue. While Colombia’s economy remains one of Latin America’s best, falling petroleum prices have caused the currency to drop more than 40% from highs in 2011 and unemployment remains high.
Vargas Lleras proposal includes slashing taxes on businesses to boost investment in the country and lift small businesses which have been burdened with some of the region’s highest taxes.
“Today we have one of the highest tax rates in the world, we’ve arrived at 69.8%, an amount that is excessively. It is affecting our competitiveness and our ability to grow the economy”, the presidential candidate said while releasing his proposals.
The proposed tax decrease would be accompanied by more deductions for businesses, including elimination of all taxes on dividends, elimination of all taxes the sale of shares, and a two-year depreciation of 100% on the cost of new corporate investments in machinery and equipment.
Finally, the proposal allows companies to write-off at 100% the famous 4×1.000, an unpopular tax on all citizens and businesses that takes 0.4% from every transaction or transfer made in the country. The tax was initially imposed to fund the military during the government’s battle with the FARC.
The tax decreases would need to be accompanied by significant cuts in spending, a topic not addressed in Vargas Lleras’ proposals.
Proponemos por fin una reforma tributaria pensada en el País, en cada uno de los colombianos y no solo en unos pocos y en el Estado #MejorEconomía pic.twitter.com/sAqV1YpZIf
— Germán Vargas Lleras (@German_Vargas) November 14, 2017
