Colombian Entrepreneurs Warn Tax Reform Generates Collateral Damage
Guillermo Botero, president of the National Federation of Merchants (Fenalco), took advantage of an encounter with the Minister of Finance, Mauricio Cárdenas, to discuss the negative effects of Colombia‘s upcoming tax reforms. Cárdenas and Colombia’s economic team are on the fifth day of negotiations to determine the minimum wage that is to take effect in the nation from January 2017 on.
According to Botero, the uncertainty generated by the inclusion of tax increases and the increase in the tax base proposed in the tax reform legislation has led some companies to distribute their dividends ahead of time so as not to be affected by reform in fiscal year 2017. Botero says that he has known cases in which companies have called special shareholder meetings in order to distribute the dividends, which, according to him, has negative implications for Colombian firms.
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In an interview with the Colombian daily El Espectador, the president of Asobancaria, Santiago Castro, complained of the high tax rates and burdens that Colombian businesses and entrepreneurs currently face, but also acknowledged the government’s rationale and need for bolstering the country’s credit rating and finances, citing them as key reasons for their attempt to implement the reforms amidst an era of falling government revenues.
The meeting also generated controversy when Minister Cárdenas announced that the government was not going to discuss the matter of the proposal for the 2017 minimum wage until president Juan Manuel Santos returns from his official visit to Europe, where he received the Nobel Peace Prize. This development did not sit well with the vice president of the Central Unitaria de Trabajadores (United Center of Workers), who described it as a lack of respect that only the Minister of Finance was on hand to speak.
This is not the first time that entrepreneurs have voiced concerns about Colombia’s tax reform legislation. They have sharply disagreed with the government’s manner of implementing the reform, and warn that the country’s production could suffer if the text of the reform is not reviewed following its approval by Congressional committees, who have already given it their stamp of approval.
Source: El Espectador