Ambitious fiscal reform faces obstacles in Colombia

Significance

The plans, presented to Congress on April 15, aim to increase tax revenues by an unprecedented COP23.4tn (USD6.4bn) and make permanent a basic income programme started during the COVID-19 pandemic. Such moves would help fill the fiscal hole created during the pandemic and strengthen the social safety net. However, their advancement will be difficult.

Impacts

• Failure to pass fiscal reform, or the passing of a watered-down bill, would damage Colombia’s credibility with international investors.
• Ongoing pandemic challenges and lockdowns will see firms and households require support well into 2021.
• A permanent basic income for poor households would be an important step towards a more progressive social policy.