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Colombian leftist president presents ambitious tax plan

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The Associated Press

Associated Press

Astrid Suarezmanuel Rueda

Colombian President Gustavo Petro gives a joint press conference with Chile's President Gabriel Boric at the presidential Narino Palace in Bogota, Colombia, Monday, Aug. 8, 2022.
Colombian President Gustavo Petro holds a joint press conference with Chilean President Gabriel Boric at the Narino Presidential Palace in Bogotá, Colombia, Monday, August 8, 2022. Photo by Fernando Vergara /THE ASSOCIATED PRESS

Bogota, Colombia (AP) — Colombia's first leftist president on Monday unveiled an ambitious tax plan aimed at raising up to $11 billion a year for anti-poverty programs.

Gustavo Petro was sworn into office on Sunday, pledging to fight economic inequality while investing in rural areas that have been plagued by drug-related violence. I promised.

Less than 24 hours after he was sworn in as president, the new president introduced a tax reform bill to Congress that would raise income taxes on wealthy individuals and impose his 10% tax on oil exports. did. The bill also includes an annual wealth tax on individuals with net worth over his $750,000 and a sales tax on soft his drinks and highly processed foods.

Petro, a former rebel group member, said it was essential for Colombia to increase government spending to fight poverty and implement a 2016 peace deal with the Colombian Revolutionary Armed Forces, including land. said there is a reform and rural development programme.

Tax collections in South America accounted for about 19% of total GDP in 2020, slightly below the Latin American average. Member countries of the OECD, an organization composed mostly of developed countries, collect an average of 33% of their GDP in taxes.

Colombia's government has long struggled to collect taxes because much of the population works in the informal economy. Last year, conservative President Yvan Duque's efforts to raise income taxes and some sales taxes sparked mass protests that killed more than 50 people.

Petro's incoming finance minister said the new tax reform plan would only seek to raise personal income tax on his wealthiest 2%. He addressed the issue in his inaugural address, urging Colombia's richest citizens to accept greater taxation.

"This should not be seen as punishment or sacrifice," he said. "It's just a payment of solidarity made by the lucky ones to a society that has allowed them to create wealth." is doubling and taxing the products of digital companies not based in Colombia. This could mean the Colombian has to pay more taxes on her Netflix subscriptions and his Amazon book purchases.

The Colombian Congress must debate Petro's proposed plan, which is expected to affect several sectors of the economy.

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