Tax Breaks Leave a Fiscal Hole but Fail to Curb Colombia Unrest
Tax Breaks Leave a Fiscal Hole but Fail to Curb Colombia Unrest
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Tens of thousands of Colombians occupied Bogota’s central plaza on Wednesday after a government pledge of $600 million in tax rebates failed to stem mass protests.
Labor unions, students, indigenous groups and others marched in the capital against the government’s economic policies, as two weeks of demonstrations against President Ivan Duque regained momentum after a lull. There were more than 150 protests nationwide, police said.
The measures Duque announced last week were so expensive that Colombia now probably faces a downgrade to its credit rating, according to BNP Paribas. Even so, they weren’t enough to kill the protest movement that sprang up last month.
Protesters banged pots, set off fireworks and shouted, “Down with the reforms,” a day after the government’s tax bill was passed by committees in congress. Some flung themselves on the ground to simulate having being shot, to protest heavy-handed police tactics used at recent marches.
“The tax reform is more of the same strategy, of telling people they’re getting more investment and jobs, while, the benefits really go to the rich,” said Kenny Juliana Martinez, a 25-year-old lawyer protesting outside congress. “The government treats us like we’re idiots. They haven’t listened.”
The presidency didn’t reply to an email seeking comment.
The bill, which cuts taxes on corporations and increases them on high-earning individuals was approved by congressional committees on Tuesday, and will next be debated in the chambers of the upper and lower houses.
Duque last week said the government would amend the bill to include rebates on value added tax for the poorest fifth of the population, and three days per year free of VAT on some products.
This will hit government revenues in 2020 and exacerbate Colombia’s fiscal problems, BNP Paribas wrote in a research report dated Dec. 2. There is now a “strong likelihood” that the country will suffer a ratings cut in the first half of next year, BNP said.
Duque’s approval rating continues to slide. It’s fell to 24% in an Invamer poll, conducted from Nov. 22 to 30, down from 26% a month earlier.
To contact the reporters on this story: Ezra Fieser in Bogota at efieser@bloomberg.net;Matthew Bristow in Bogota at mbristow5@bloomberg.net
To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Robert Jameson
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