More individuals must pay income tax

A report by the Organization for Economic Cooperation and Development (OECD) puts the spotlight on the payment of income tax by individuals.

A good part of the existing income tax benefits should be eliminated.

On March 30, 2022, Jens Arnold, one of the OECD economist for Colombia, presented a report at the National University where, among other topics, he analyzed the fiscal and tax panorama of the country, focused on individuals.

For the entity, with the current tax reform a gradual fiscal adjustment will be achieved, which should bring the public debt to be close to 60% of GDP over the next 10 years. However, although it is a stabilization, it continues to represent 8.5% above pre-pandemic levels.

The OECD points out that tax revenues, which amount to 20% of GDP, are not sufficient to sustain the above scenario.

Only 5% of individuals pay income tax, which is the main explanation for the low tax collection, while tax expenditures and evasion reduce revenues in all tax areas.

It is not possible to demand the payment of taxes from people who are not aware of them, who do not know how to comply with their obligations and who in some cases do not even know that they are obliged to comply with any formal duty.

He explains that it is necessary to guarantee due retribution to taxpayers, that is, road and social infrastructure, education, sports, health, among other issues. Furthermore, it is not possible to expect the middle class to contribute more if they do not have quality roads, education and health, he warns.

For his part, Mauricio Santamaría, president of the Center for Economic Studies Anif, has always been clear in stating that in the country there is a need for more individuals to pay income tax in order to balance the burdens and generate greater formality. Therefore, it would be advisable to

Expand the base of natural persons taxpayers with a progressive marginal rate. In Colombia, only 4.5% of the economically active population pays income, which leads to the fact that this tax is only surcharged at 20% on individuals (natural persons) versus 80% legal persons, contrary to what is observed globally.

Source: Actualícese

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