EconomyFinancialThis is the tax reform proposal that seeks that...

This is the tax reform proposal that seeks that the richest pay more

Academics from the universities Javeriana, Externado, de los Andes and del Rosario, as well as Fescol, presented a document that would raise $ 20 billion annually and that would not make people who earn less than $ 6 million per month pay more.

Raising more than $ 20 billion annually without taxing people who earn less than $ 6 million per month and without touching VAT is what researchers from the Javeriana, Externado, de los Andes and Rosario universities, as well as Fescol, propose jointly. This academic group presented this Thursday a document with its tax reform proposal in the hope that it will be discussed and taken into account in the public debate on the country’s fiscal future after the fall of the tax reform proposed by the Government and led by the ministry of Alberto Carrasquilla.

Luis Carlos Reyes, director of the Fiscal Observatory of the Javeriana University, who made the presentation, insisted that the objective of this proposal is not only to meet the country’s fiscal needs, but to do so in a progressive and sustainable way, that is, not with temporary measures or affecting SMEs or people with lower incomes. The proposal, he added, focuses on taxing people with greater contribution capacities by taxing, without special benefits, dividends and occasional earnings.

Read the full document of the universities’ proposal by clicking here .

“The collection obtained by the modifications to the personal income tax that we recommend comes from the people with the highest incomes in the country. Thus, for example, in the proposal of the national government, a person with labor income of 500 million pesos per month would be taxed at an effective rate of 35.9%, while in ours it would be taxed at an effective rate of 40.4% ” explains the document. “However, the central difference of our proposal is that it not only taxes labor income at these rates, but also applies them to dividends and occasional earnings, which are small or non-existent sources of income for employees, but very important. for the richest in the country, and that in the Government’s proposal they would be taxed at effective rates that generally do not exceed 15% or 10%, respectively, ”he adds.

The emphasis on taxing occasional gains without benefits is that, as Reyes explains, practices such as the repurchase of shares by companies are currently used so that taxes are applied on occasional gains (which have a better treatment) and not properly on dividends. “If the income comes from occasional gains –as in the case in which the taxpayer is a shareholder of a company, and the company buys some of their shares from them at a price higher than the one they paid initially– the rates in the table apply to them. to the valuation of the shares ”, explains the proposal.

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In total, taxing the richest 1%, 0.1%, 0.01%, and 0.001% in the country would yield $ 11.08 trillion.

Another $ 660,000 million would come from the “elimination of special income tax rates for free zones and other special rates.” Some $ 2.14 trillion more would be obtained from the elimination of exempt income in the corporate income tax and $ 5.36 trillion, from the elimination of the ICA discount.

Regarding other types of practices that affect collection, the team proposes “to eliminate the possibility of determining the fiscal cost of real estate through the self-appraisal mechanism”, given that “it has become a recurring practice on the part of citizens , prior to the realization of the sale of real estate, increase the declared value in the private liquidations of the property tax and the income tax, so that at the time of the realization of the income, that is, at the moment in which the perfect its sale to any title, the difference between the cost and the sale price is as low as possible and, consequently, the tax paid is also so ”.

The group also highlighted that this tax proposal would have an even higher collection than that announced by the new Minister of Finance, José Manuel Restrepo ($ 14 billion). Reyes also stressed that it is not ruled out that more people can pay income taxes, however, he was emphatic that a moment of crisis like the current one is not the right one to expand that base.

Read more about this in: The new tax reform would be $ 14 billion: José Manuel Restrepo, Minister of Finance

It is worth remembering that from other fronts, such as the private sector, other proposals in tax matters have also been thrown in light of the country’s fiscal needs.

We recommend: Andi’s alternatives to tax reform

Fiscal uncertainty was precisely one of the factors that led Standard & Poor’s to announce yesterday the loss of investment grade for Colombia. Reyes, de la Javeriana, however, affirmed that he believes that it is possible to regain confidence while carrying out a progressive and sustainable reform.

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