General strike9/3/2023 ![]() As a result, thousands of Colombians took to the streets on April 28 to protest the proposed reform.ĭespite the government modifying the bill on April 30 and removing it on May 2, protests continued and expanded to include preexisting grievances, many exacerbated by the COVID-19 pandemic. Notwithstanding the advisability-and even urgency-of addressing Colombia’s fiscal situation, a tax hike on top of COVID-19 lockdowns, led many to conclude that the approach was not well timed. Many political parties and leaders, including those close to President Duque, were also against it. 6 Aliza Chelminsky, et al., “Ficha Técnica: Evolución de la Situación en Colombia,” Centro de Estudios Internacionales Gilberto Bosques, May 2021. However, most Colombians-fully 80 percent-opposed the bill. 5 Most VAT exempt products in Colombia are basic necessity goods included in the country’s Canasta Básica – a group of goods considered necessary to meet a household’s basic needs. The reform would have reduced the threshold for starting to pay income tax, placed a value-added tax (VAT) on new products and services, and removed many VAT exemptions. 4 Carolina Salazar Sierra, “Estos son Todos los Puntos que Incluye la Tercera Reforma Tributaria de Iván Duque,” República, April 2021. President Iván Duque’s proposed tax reform aimed to improve Colombia’s fiscal situation by raising nearly $6.4 billion. In fact, Standard and Poor’s (S&P) Global Ratings reduced Colombia’s credit rating from BBB- to BB+ on March 19, moving the country’s debt to junk bond status and hurting future economic growth. Fiscal instability compromises a country’s ability to attract foreign capital, create new jobs, provide public services, and finance social programs. If unattended, Colombia’s fiscal situation will negatively affect societal well-being and quality of life in the medium-to-long term. In 2021, the fiscal deficit is expected to reach 8.6 percent of GDP, and public debt 65 percent. 2 Carolina Salazar Sierra, “‘Esta Reforma Tributaria, tal Como la Presentó el Gobierno, no Va a Pasar en el Congreso,’” República, April 2021. As a result, the fiscal deficit rose from 3.2 percent of gross domestic product (GDP) in 2019 to 7.8 percent in 2020 public debt increased from 44 percent of GDP in 2018 to 55 percent in 2020. It increased public spending to strengthen the healthcare system, to assist vulnerable populations, and to help businesses remain afloat. To address this situation, the Colombian government undertook a series of emergency actions in 2020. 1 “Pobreza Monetaria y Pobreza Monetaria Extrema 2019,” Departamento Administrativo Nacional de Estadística (DANE), October 13, 2020, “Pobreza Monetaria y Pobreza Monetaria Extrema 2020,” Departamento Administrativo Nacional de Estadística (DANE),April 2021. Poverty rose from 35.7 percent in 2019 to 42.5 percent in 2020, which reversed the country’s progress in the fight against poverty by almost ten years. ![]() In 2020, its economy contracted by nearly seven percentage points, affecting the livelihoods of millions of people. Colombia, like other countries in Latin America and the Caribbean (LAC), was hit hard by the COVID-19 pandemic.
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