Colombia’s government will rush a tax bill to Congress this week to fill a budget hole that opened up when the Constitutional Court struck down a presidential decree aimed at funding healthcare.
The court’s decision on Friday threw out President Alvaro Uribe‘s February decree imposing a levy on alcoholic beverages, cigarettes and gambling. Money raised by these taxes was to go toward funding Colombia’s cash-strapped healthcare system.
But the court decided that Uribe’s emergency healthcare reform – which would have provided $500 million through 2011 – was not justified as an executive order and that the measure would have to be voted on by the legislature.
Recognizing the financial problems that Colombia’s health system faces, the court delayed the effect of its decision until mid-December. This will allow the decreed taxes to remain in effect until then and give Congress time to pass a healthcare funding package of its own.
“The government is ready to work arm-in-arm with Congress,” Uribe said over the weekend.
But it will not be easy for him to get new taxes passed.
The president’s legislative clout is dwindling as he prepares to step down in August at the end of his second term. Voters will choose his successor in May’s presidential election.
“Congress is distracted by the election and this is not a good time to talk about raising taxes,” Santiago Castro, senior ranking member on the lower House economic affairs committee told Reuters. “It will be a difficult debate.”
Other aspects of Uribe’s decreed healthcare reform sparked protests from critics who said the plan would reduce services, especially to poorer sectors.
Earlier this year, the Constitutional Court struck down a plan to hold a referendum intended to enable Uribe, a Wall Street favorite popular for his U.S.-backed crackdown on leftist guerrillas, to run for a third term.
Health Minister Diego Palacio said he and other government officials were working “as if in a marathon” to draw up tax legislation to be submitted to Congress on Monday or Tuesday.
“The finance ministry, health ministry and the president’s legal staff will prepare the necessary bill,” Palacio told reporters. “It will be marked ‘urgent.'”
Finance Minister Oscar Ivan Zuluaga had predicted that an adverse court ruling would put government finances “in a difficult situation.”
Over the weekend he said gamblers, smokers and drinkers would be asked to foot the bill for the increase in health insurance funding under the planned legislation.
Colombia expects economic growth of 2.5% this year as Latin America’s No. 4 oil producer climbs back from the global doldrums of 2009. The government’s high deficits are a key impediment to Colombia regaining its investment grade credit rating. (Hugh Bronstein / Reuters)