there is no one way


The pandemic crisis – and the subsequent inflation, recession and disruption of global supply chains – has generated both rising social demand for public spending in many latitudes and the need to discuss fiscal adjustments that stabilize government finances. Colombia is no stranger to these tensions and a tax reform project promoted by the national government seeks to raise an ambitious $25 billion, much of it on the shoulders of the private sector.

Some of the measures proposed by government initiatives, which affect companies’ tax rates and tax-extracting industry exports, have been discussed and implemented in other parts of the world. In fact, President Gustavo Petro has repeated on his Twitter account the front pages of the Spanish media that report on similar measures by the socialist administration of Pedro Sánchez. The Spanish government wants to tax energy companies, banks and recently announced a new tax on that country’s biggest asset.

According to the Colombian president, these new taxes for these specific business sectors cause inconvenience and anxiety in the country, but they are a propaganda formula in the old continent. In any case, raising taxes on private companies on the other side of the Atlantic is not the only option being discussed.

This week the newly inaugurated Prime Minister of the United Kingdom, Liz Truss, announced a package of measures to revive the British economy. What’s new is that the truce’s plan focuses on spurring economic growth through tax cuts. Downing’s No. 10 scrapped the planned corporate income tax hike from 19 percent to 26 percent, a 45 percent top-income tax rate and other initiatives to attract investment. It is not certain that this injection of growth, investment and incentives to companies will translate into growth and the proposal is accused of raising public debt. At least it shows that raising taxes on the same companies is not the only way to tide over the current crisis.

Francisco Miranda Hamburger
[email protected]
Twitter: @pachomiranda

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