Colombia may have to return up to $3.9 billion in tax revenue from last year and lose a similar amount in future annual collections if a high court declares a government tax reform unconstitutional, the finance minister said on Wednesday.
The constitutional court is analyzing the legality of a tax reform approved by Congress in 2010 after receiving various lawsuits complaining that the official gazette did not publish it by the required time.
The Andean nation would need to seek other sources of financing to pay for social programs after heavy rains swept away roads and bridges, and thousands of Colombians lost their homes, Finance Minister Juan Carlos Echeverry told reporters.
“The size of the damage depends on how the ruling comes out,” Echeverry said, while initially ruling out debt issuance to cover the costs.
Echeverry suggested corrupt company officials may have paid for the delay in publication in a bid to avoid an increase in tax payments. The reform was published in January 2011 when it should have been published before the end of 2010.
Colombia’s battle against corruption and evasion helped boost tax revenue 25 percent last year compared to 2010, to about $48 billion. Echeverry expects $52.6 billion in 2012.
The government plans to send another tax reform to Congress in March that aims to spur higher economic growth and create jobs without increasing the tax burden in Latin America’s No. 4 oil producer.