Colombia’s President Ivan Duque is struggling to present his government’s 2019 budget to Congress after multiple preliminary revenue proposals were struck down almost unanimously.
Duque had initially said the government had to “seek responsible solutions” to find cash to plug a “real” deficit of $4.3 billion (COP14 trillion).
An unpopular proposal to up VAT to 80% on basic food goods was thrown out last week before it even was presented to Congress and Duque was left to look elsewhere to find the revenue to cover his planned spending.
Despite widespread poverty, Colombia wants to tax basic necessities
To make Duque’s matters worse, Colombia’s Comptroller General said Monday that the deficit Duque had to deal with was in fact over $9 billion (COP30 billion).
“We cannot continue to have to cover up the issues momentarily,” Comptroller General Felipe Cordoba said.
“The deficit is structural and needs structural solutions and not momentary ones, to address the large investments required by the country,” Cordoba added.
Colombia’s Finance Minister Alberto Carrasquilla last week was looking into the possibility of introducing a VAT on funeral services as well options of taxing pasta, live fish and sausage.
A possible increase in VAT on beer and soft drinks was also being considered, but quickly abandoned after pressure from powerful captains of industry.
Proposed by Finance Minister Alberto Carrasquilla, the idea to tax basic necessities was controversial from the start as it would hit disproportionately the poor, many of whom don’t have enough food for three meals a day already.
The minister has reportedly failed to consider looking into tax evasion which, according to tax office DIAN, amounts to approximately 23% of the country’s GDP.
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Duque, who came to power in August, has consistently blamed his predecessor Juan Manuel Santos of the country’s structural financial woes.
Santos officials last week sent a letter to Duque’s administration telling them that the current deficit had little to do with overspending on part of the previous government.