Colombia’s Constitutional Court ruled Tuesday that only Congress has the power to set tax rates on combustibles, annulling a 2011 law turning that power over to the Ministry of Mining and Energy.
The ruling comes as truckers and farmers prepare to negotiate with the national government over what they claim are crippling gas prices in the country.
For the past two years, the Ministry of Mining has been charged with overseeing a tax program designed to regulate the internal price of energy and insulate it from fluctuations on the international market.
Yet, according to the Constitutional Court, which declared unconstitutional Article 1010 of 2011’s Law 1450, only Colombia’s legislature has the power to tax and set tax rates.
The ruling means the burden will now fall on Congress to address what is an increasingly pressing issue for various sectors of the Colombian economy, taking pressure off the administration of President Juan Manuel Santos, which up until this point has had to absorb the full brunt of the public’s growing discontent.
Calls are coming in from both industry workers dependent on fuel and regular citizens with daily transportation needs to lower the price of gas in Colombia, which is among the highest in Latin America, despite high levels of energy exports. Farmers and truckers, for example, claim gas prices make their livelihoods infeasible, one of the central motivators behind recent nationwide strikes.
Minister of Finance Mauricio Cardenas has said it will cost close to $1.5 billion annually to lower the price of gas by the $0.50 per gallon rate advocated by truckers, sapping resources for social investment programs. Critics, meanwhile, suggest reforms in Colombia’s mining and energy policy, which encourages foreign companies to mine Colombia’s resources, leaving the country to import processed petroleum from elsewhere and compensating it with relatively meager royalty fees.
Either way, decisions regarding Colombia’s gas prices will now be in the hands of the country’s Congress, members of which have already expressed a desire to freeze prices immediately, as they devise a long-term strategy to bring down costs.
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