Economic situation in Colombia

[Pacino]

... in response to Re: Economic situation in Colombia, posted by bogota vet on Oct 1, 2002

Colombia Government Presents Bill To Congress To Raise Taxes
Fri Sep 20, 9:16 AM ET

BOGOTA -(Dow Jones)- Colombia's government late Thursday submitted a bill to congress that would raise taxes on everything from beer to airplane tickets and, in doing so, collect an extra 2.3 trillion pesos ($1=COP2809) in 2003.

The overall aim of the tax hikes, said Finance Minister Roberto Junguito in a press conference, is to reduce the fiscal deficit.

Colombia's consolidated public deficit last year was 3.3% of gross domestic product, and the government says it's unlikely it will attain this year's target of 2.6%, agreed to with the International Monetary Fund ( news - web sites).

In fact, Junguito has said, the shortfall could surpass 4% of GDP ( news - web sites) if this tax bill and other deficit-cutting plans aren't approved by congress.

The government also wants the extra revenue to support an increased effort to end a civil conflict that's been going on for 38 years and claims 3,500 - mostly civilian - lives a year.

President Alvaro Uribe has said he wants to spend an additional $1 billion this year to fight the war.

The biggest changes to the tax laws through this bill would come from the value-added tax. The number of products tagged with the standard 5% VAT would be widened, thought basic products such as milk, bread and eggs would remain exempt.

Beer, meanwhile, would be slapped with a 13% VAT. Airplane tickets, margarine, oils and advertising would face a 16% VAT.

The government seeks an additional COP1.4 trillion next year in revenue from these VAT changes.

The bill would also raise, temporarily, the income tax level to 38.5% from 35% , which would bring in an extra COP349 billion in 2003.

Tax evaders would receive stiffer penalties, including jail time for up to eight years, if the bill is passed.

Congressional officials said on RCN Radio Friday debate will begin within 15 days.

This is the third reform bill, after pension and labor, that Uribe's team has presented to congress in the past month.

Junguito is also trying to convince congress to call a referendum that would put a partial freeze on general government spending in an effort to save up to COP800 billion.

[Aaron]

... in response to COLOMBIAN BILL PROPOSAL, posted by Pacino on Oct 1, 2002

In one way, the citizens may even start to resent these taxes, especially if it doesn't lead to progress.

If I was financially challenged, the last thing I would want to do is pay out more taxes to the government, especially if they can't guarrantee results.

But, I'll give Uribe a chance to see how things go.

Aaron

[Aaron]

... in response to COLOMBIAN BILL PROPOSAL, posted by Pacino on Oct 1, 2002

LEAD TO MORE NACRO-TRAFFICKING. People are going to do whatever they can to scratch up additional money to live a life that they are used to having.

Aaron

[Aaron]

... in response to All this is going to do is............., posted by Aaron on Oct 1, 2002

That's NARCO-TRAFFICKING. Sorry for the typo.

Aaron

[Celt]

... in response to All this is going to do is............., posted by Aaron on Oct 1, 2002

I have to agree with Aaron. The people in large Colombian
cities are not campesinos. They remember a nice middle-class
existence that has almost disappeared for most of them. Many
will take desperate measures.

I heard this story expressed as a "life-style" fear, one
which I find bizarre. If a Colombian goes to a bank to make
a withdrawal, the clerk may face pressure from local banditos
to make a note of the person, and tell the bandidos
the amount, etc.

Later, the bandidos can pay a visit to the bank customer,
or engineer a kidnapping.

Ridiculous? My novia does not go to the bank in many parts
of Colombia.

[Aaron]

... in response to Re: All this is going to do is............., posted by Celt on Oct 1, 2002

n/t

[bogota vet]

... in response to COLOMBIAN BILL PROPOSAL, posted by Pacino on Oct 1, 2002

OK, I didn't know it was like that

[bogota vet]

... in response to Re: Economic situation in Colombia, posted by bogota vet on Oct 1, 2002

Flying back on Avianca, the economy class restroom was full, 10 people in line.
The first class rest room was empty, I said I'm not waiting , I went to the first class rest room. The others Colombians did not go, just wait 20 minutes holding it in, such is the mindset of a class society.

Earlier on the flight, I had the flight attendent , is there a rest room up front?, she said no use the one at the back of the plane.

[Aaron]

... in response to Re: Re: Economic situation in Colombia, posted by bogota vet on Oct 1, 2002

Bogota Vet,

Good point. Colombia is an extremely classest society, both racially and economically. And you're right, the one's who have the most, have been turning a deaf ear to those who don't have for decades. That's a big reason why there is such a mess there now. If this mindset doesn't change, then the country will continue to suffer. It doesn't make any difference if one person is eating oatmeal out of a pan and another person out of the finest china plates.
 
Aaron