Colombia’s banks will press the government to stabilize the country’s tax reform program, urging Colombian President Juan Manuel Santos to stop “changing the rules every 24 hours.”
“In the current administration we’ve already had four [changes to tax law], and we are now preparing for another: so the message they are sending is that the rules are always changing for the population, and that is not healthy. You cannot change the rules of the game every 24 hours” says Maria Mercedes Cuellar, president of the Banking Association (Asobancaria).
Colombia’s banks are one of the most powerful economic groups in the country and they have proposed several structural reforms to the tax laws that could help to stabilize expectations about future changes.
These reforms include reducing the tax rate for businesses, expanding the base of the population who pay taxes (current levels are far below OECD standards), and putting in strict control measures for non-compliance, according to Santiago Perdomo, president of Banco Colpatria, a large Colombian bank.
MORE: World Bank signs on to fix Colombia tax collection
One major and immediate problem that the banking community says it wants to bring to the government’s attention is the taxing of electronic payments, which incentivizes merchants to take cash and slows the integration of electronic payment systems into the wider economy.
MORE: Bank withdrawal tax impedes sectoral growth: Colombian banks
Moreover, this “electronic tax retention” is inflating the amount of hard cash in the economy to levels above those countries with similar levels of development.
“The goal is that 30% of the liquidity in the economy will be cash in two years, a rate similar to countries having the same levels of social and economic development as Colombia, and to later reduce it to 20%, which is the level of the US and Chile,” says Perdomo.
The convention was set to start on Friday and run until Saturday.
Sources
- ‘No se pueden cambiar las reglas cada 24 horas’ Asobancaria (El Tiempo)