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LatinNews Daily - 14 July 2021

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In brief: Colombia’s gov’t announces new tax reform bill

* Colombia’s finance minister, José Manuel Restrepo, has unveiled a new tax reform bill, after the government’s previous attempt to reform the tax system was withdrawn in May in the face of massive protests. The new bill, which was drafted after two months of consultation with diverse sectors of Colombian society, avoids increasing the tax burden on the middle- and working-classes, instead proposing increased tax rates for businesses whilst simultaneously outlining cuts in government spending. According to the finance ministry, this would increase government finances by as much as Col$15.2trn (US$3.97bn), to help overcome a fiscal deficit of over Col$90trn. Funds would be raised from a 35% corporation tax (up from the current rate of 31%), while austerity measures would also be introduced to reduce government spending by Col$1.9trn. The finance ministry says that the impact of these austerity measures will be cushioned by increased social spending on programmes such as the extension of the programme to support formal employment (Paef), a furlough scheme introduced in the context of the coronavirus (Covid-19) pandemic. The bill also contains measures to clamp down on tax evasion, which it says will increase the annual tax haul by Col$2.7trn. The reaction to the bill has been mixed, and its prospects will become clearer when it is presented to congress on 20 July.