These are the Democratic Center changes to tax reform to avoid being overthrown in Congress

This Saturday, the ruling party, Democratic Center, presented an alternative text of the project already submitted by the Ministry of Finance for a new tax reform. With this, they seek consensus in Congress not to abandon the proposal which already has several political parties determined to overthrow it.

The party proposes that they have transitional taxes of around $ 12 trillion without affecting middle-income people nor productive recovery. They ask the Banco de la República 5 billion pesos before the profits.

1. These resources will be managed in a special account to overcome the social and employment problem of the pandemic.

2. Use of resources: Solidarity income for 5 million families. Extend the wage subsidy to 3.6 million workers. Subsidize social security for new young workers, women, adults and people with disabilities. VAT refund to 4 million families. Free public university for strata 1, 2 and 3.

3. Spending austerity and administrative reform with savings of 1 billion during the first 2 years and permanent savings of 15 billion.

4. Sources of resources: Three-year transitional surcharge of 10% to 12% for individuals who pay taxes today, estimated collection: 2 billion. Maintain a 1% equity tax on over $ 5,000 million, as in force, for three years, estimated recovery: $ 1 billion. Dividends, the tax in force for residents is retained with an additional surcharge for 3 years. Freeze the rental rate for businesses at 33% for three years, after which it will be 30%, estimated collection: 3 billion.

Maintain the return of industry and commerce to corporate income at 50%, for three years, estimated collection: 5 billion. Extend the transitional 3% surcharge currently charged to banks to the entire financial sector. 10% solidarity tax for income over 20 million in 2021, which functions as a withholding tax. Standardization: one year extension of what was approved in 2019, estimated collection: 0.5 billion. Green taxes.

5. Update the fiscal rule to ensure the sustainability of public finances in the medium term.

6. Make active elimination efforts for EAS over the next two years.

7. Request a profit advance from the Banque de la República for 5 billion.

The businessmen’s union also launched a separate tax reform proposal:

1. Suspend the measure to update the Tax on Industry and Commerce (ICA) in the Income Tax, for the necessary period according to the results indicated by the medium-term budgetary framework. Currently the discount is 50% of the amount paid by ICA and from 2022 it would be 100%.

2. Postpone the reduction in the general income tax rate in accordance with the results indicated in the medium-term budgetary framework. The general rental rate is currently 31% and from 2022 it would be 30%.

3. Introduce personal wealth tax for two years. It would be a temporary tax that would affect exclusively individuals who have cash in excess of $ 5,000 million, with a rate of 1%.

4. Advance the sale of assets of the nation which, as a whole, could grant up to 15 trillion pesos to be used in the immediate financing of programs such as Ingreso Solidario and PAEF, as well as for debt service needs short term.

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