[If implemented, the Piketty-esque legislation proposed by
President Gustavo Petro could raise more than $11.5bn annually to fund
anti-poverty efforts, free public university and other social welfare
programs. ]
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COLOMBIA’S LEFTWING GOVERNMENT UNVEILS TAX-THE-RICH PLAN TO TACKLE
POVERTY  
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Megan Janetsky
August 26, 2022
The Guardian
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_ If implemented, the Piketty-esque legislation proposed by President
Gustavo Petro could raise more than $11.5bn annually to fund
anti-poverty efforts, free public university and other social welfare
programs. _

President Gustavo Petro aims to channel the taxes raised in
anti-poverty efforts, free public university and other social welfare
programs., Photograph: Luisa González/Reuters

 

Colombia’s new leftist government has proposed an ambitious plan to
tax the rich in an effort to combat poverty in one of the most unequal
countries in the Americas
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If implemented, the Piketty
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legislation proposed by President Gustavo Petro could raise more than
$11.5bn annually to fund anti-poverty efforts, free public university
and other social welfare programs.

Petro, a former urban guerrilla who became the country’s first
leftist leader
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rose to power on a raft of promises centered around social progress at
a time when the South American country is still plagued by
pandemic-fueled economic turmoil.

If passed, the plan would raise taxes on the country’s highest
earners – approximately 2% of Colombia’s population – cut tax
benefits for the richest and fight tax evasion.

The tax hikes would progressively increase as income increases. It
would add an annual wealth tax on savings and property above $630,000,
and would add a 10% tax on some of Colombia’s biggest exports –
oil, coal and gold – after prices rise above a certain threshold.

“This should not be viewed as a punishment or a sacrifice,” said
Petro. “It is simply a solidarity payment that someone fortunate
makes to a society that has enabled them to generate wealth.”

The wealth tax was among Petro’s chief promises during his campaign
and would mark a significant step toward achieving his bold policy
agenda, which has inspired hope in some and skepticism in others.

It is also part of a larger debate playing out around the world at a
time of deepening global inequalities.

“This is not just Colombia
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Álvaro Pardo. “This is a large conversation in any country – the
ideas of equity and progress, the idea that those who have the most
have to pay more. These are universal concepts we’re drawing
upon.”

Petro’s proposal has prompted alarm in the country’s private
sector and political elite who argue the tax will dampen investment,
push job creators out of the country and – according to the
arch-conservative former president Álvaro Uribe – potentially
deepen poverty.

“We support all these efforts for the country to overcome
poverty,” Uribe said
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a meeting with Petro this summer. “But not at the cost of withering
away the private sector.”

But at the height of the country’s decades-long armed conflict,
Uribe imposed a similar temporary tax in order to fund his war with
the Revolutionary Armed Forces of Colombia (Farc) guerrilla group.

Last year, amid stewing resentment for Petro’s predecessor, Iván
Duque, another tax reform proposal ignited months of anti-government
protests
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which became symbolic of deeper social unrest and endemic
inequalities.

“It was sort of a perfect storm from political opposition to the
government, post-pandemic economic hardship and the government’s
response,” said Sergio Guzmán, director of Colombia Risk Analysis.
“Under this government, things are different.”

[A supporter displays a banner saying ‘Don’t let us down’ at the
inauguration of President Gustavo Petro in Bogotá on 7 August.]

A supporter displays a banner saying ‘Don’t let us down’ at the
inauguration of President Gustavo Petro in Bogotá on 7
August. Photograph: Mauricio Dueñas Castañeda/EPA

This bill, he said, “is more progressive in nature”, doing away
with key exemptions that he and economists say have allowed richer
individuals to pay lower taxes than the average Colombian.

It’s also more permanent than other wealth taxes. The measure will
now have to go through congress, where it is likely to pass.

The proposal was a welcome move for many Colombians who have felt like
they have been on the outside looking in.

Marlon Mendoza, an Afro-Colombian entrepreneur on the Caribbean coast,
was one of 1.6 million Colombians who, during the pandemic,
were knocked out of the middle class and back into poverty
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“The poor got poorer, and the rich got richer,” he said.

He went from having an office and a home in the city of Cartagena to
returning to the unpaved streets of his town of birth on the outskirts
of the city, struggling paycheck to paycheck.

Some observers warn that the tax plan will only address the tip of the
iceberg.

Pardo said: “The challenge is gigantic because it means breaking a
structure that has been in place for decades, a structure that favors
rich sectors and big companies. It’s going to be very difficult.”

But it’s that painful growth that needs to happen, says Mendoza.

“This is a new idea. Human beings, not just Colombians, we’ve
gotten used to the status quo. Down the line, if that thing is hurting
us, it’s hard to branch away from what we’re used to.” he said.
“But if we don’t do that, there will never be change.”

_Megan Janetsky is a freelance journalist based in Bogotá, Colombia.
She covers human rights, migration and politics across Latin America._

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