Tax reform: proposals for the upper and salaried classes

The Tax Network proposes that no salaried employee or pensioner earning less than 6 million pesos per month should pay more in income.

It also suggests eliminating all tax benefits, including special rates and ICA discount, which give preferential treatment to some sectors.

The Tax Work Network (Universidad Javeriana, Universidad Externado de Colombia, Universidad del Rosario, Universidad de los Andes and Fescol) submitted for consideration of the national government and the Congress of the Republic the document A proposal for a progressive tax reform.

As its name indicates, it is a progressive tax reform proposal, focused on increasing the taxation of those whose income is in the top 1%, 0%, 1%, 0.01% and 0.001% of the country.

The proposal would permanently increase tax collection and emphasizes combating tax evasion by the highest income earners rather than raising taxes on those who have no way to avoid them:

Thus, it responds to citizens’ demands in favor of a reform in which solidarity starts from the top, and against one that recharges on consumers and wage earners. The proposal does not exclude other modifications to the tax system; it simply concentrates on those that, we believe, can be part of a national consensus. Although the proposal does not include a wealth tax, green taxes, healthy taxes, additional anti-evasion measures or guidelines for a global minimum tax, this does not mean that these proposals should be left aside.

Not affecting the pocket of wage earners, the proposal’s purpose

The Tax Network’s proposal would increase tax collection by about 2% of GDP per year. It does not include significant changes to VAT or increases to any other consumption tax.

“No salaried employee or pensioner earning less than 6 million pesos per month would pay more in income tax”.

In addition, no wage earner or pensioner earning less than 6 million pesos per month would pay more in income tax. There would also be no new individuals paying income tax:

The reform proposal, then, is based exclusively on modifications to the income tax of individuals and companies. The additional income tax collection for individuals is obtained by eliminating all tax benefits, except for 2150 UVT per year (equivalent to a monthly salary of 5.5 million or a monthly pension of 6.5 million) which will be taxed at a rate of 0 %, and taxing all income above this amount with progressive rates that treat labor income and capital income on an equal footing.

Corporate income reduction

In order to strengthen small and medium enterprises in the current circumstances, it is proposed to reduce the corporate income tax rate, without surtaxes, a reduction financed by the elimination of tax exemptions and benefits currently enjoyed by certain privileged sectors:

The corporate income tax changes embrace two of the main points proposed by the Government in the tax reform proposal already withdrawn: the elimination of exempt income and the reduction of the tax rate to 24% for small and medium-sized companies (those with annual profits of less than 13.However, our proposal is different from that of the Government in that it eliminates all tax benefits – including special rates and the ICA discount – that grant preferential treatment to certain sectors at the expense of higher taxes for others.

Finally, anti-evasion and anti-circumvention measures are proposed that in the medium term could substantially increase collections without the creation of new taxes.

Source: Actualícese