Colombia’s tax reform inching towards the abyss, dragging finance minister along

Finance Minister Alberto Carrasquilla (Image: Finance Ministry)

Colombia’s constitutional court returned President Ivan Duque’s  2018 tax reform to Congress where lawmakers are making its approval close to impossible, according to weekly Semana.

The court declared the tax reform unconstitutional in October because Finance Minister Alberto Carrasquilla failed to legally push his “budget finance plan” through Congress.

Fortunately for Carrasquilla and Duque, the court said that the ruling won’t take effect until January 1, giving Carrasquilla two months to have his loathed corporate tax cuts and tax hikes on the middle class approved.


Court sinks Colombia’s “budget finance plan”


Government ignored that Duque has gone all but toxic

Optimistically, or maybe naively, the finance minister presented the already approved tax reform to Congress a week later, hopeful that Congress would approve the reform before its three-month Christmas recess on December 16.

What Carrasquilla forgot is that the government can only count on the support of a minority coalition and that Duque has become all but toxic, partially because of Carrasquilla’s tax reform.

Duque’s far-right party, the Democratic Center, received an electoral beating in local elections late last month.

Furthermore, the president is facing massive anti-government protests on Thursday because of “Duque’s great package” of unpopular economic proposals,  including the widely loathed tax reforms.

No savvy politician would openly support Carrasquila’s tax reform at the moment.


One months after taking office, Colombia’s finance minister already facing no confidence motion


Carrasquilla on his way out?

When the finance minister presented the reform for a second time, it contained 110 articles.

Three weeks later, lawmakers from the left to the right have proposed to add more than double that, according to Semana. Some lawmakers have reportedly said another 90 proposals could follow.

Meanwhile none of the lawmakers seem to be enthusiastic to convene extra sessions, meaning that on January 1 Carrasquilla’s entire tax reform could be reversed with unforeseen consequences.

In order  not to  be subjected to lengthy and hostile debates, Carrasquilla has avoided Congress and is speaking directly to the party bosses in the hope to save his reform, according to Semana.

The 2020 budget has already been approved, but how much of that would be left without the estimated tax revenue is entirely uncertain, both for the government and Congress.

What is most uncertain is if Carrasquilla would survive his latest fiscal disaster.

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