5/10/2021 Protests in Colombia derail an important tax reform | The Economist

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The Americas May 8th 2021 edition

Taxing times

Protests in Colombia derail an important tax

reform
The unpopular bill was going to be Iván Duque’s legacy

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5/10/2021 Protests in Colombia derail an important tax reform | The Economist

May 6th 2021

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BOGOTÁ

S
ince april 28th protesters have de ed an 8pm curfew, and the risk of catching
covid-19, to take to the streets of Bogotá, Colombia’s capital. They have burned
buses and police stations and looted banks and shops. Protesters also blocked all
the main roads leading to Cali, the country’s third-largest city, for several days,
resulting in empty shelves in grocery shops and a shortage of medicine in hospitals.
At least 24 people died and more than 800 civilians and police o cers have been
injured. On May 1st Iván Duque, the president, sent in the army to quell the
violence.

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The protests were triggered by a tax-reform bill the government sent to Congress on
April 15th. On May 2nd Mr Duque withdrew the unpopular bill. The next day the
nance minister, Alberto Carrasquilla, resigned. But resentment against the
president, whose approval rating is 33%, means that the unrest is likely to continue.

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Down to brash tax: Colombia’s
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Mr Duque’s reform was sorely needed. Because of the pandemic, Colombia’s de cit
has tripled to nearly 8% of gdp. The reform would have removed many vat
exemptions and lowered the threshold for starting to pay income tax. (Income-tax
revenues in Colombia are among the lowest as a share of gdp in the oecd, a club
mostly of rich countries.) Pensions would have been taxed, too. Spending on social
programmes would have increased, potentially bene ting 19m people. Mr
Carrasquilla claims the bill could have reduced the share of Colombians who are
extremely poor (earning less than 145 000 pesos a month or $38) by six percentage
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5/10/2021 Protests in Colombia derail an important tax reform | The Economist
extremely poor (earning less than 145,000 pesos a month, or $38) by six percentage
points.

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Most Colombians, however, saw it as unfair. One of the longest lockdowns in the
world has emptied wallets and sapped morale. Last year 2.8m people fell into
extreme poverty. More than 500,000 businesses have closed. Even though the tax
increases would hit the wealthiest hardest, 80% of people, when surveyed, opposed
the bill.

The bill was not the protesters’ only grievance. Colombians are frustrated,
particularly with Mr Duque. The president promised to make the country safer. But
violence is getting worse. Colombia is exporting record amounts of cocaine and
illegal armed groups are growing stronger. Since 2016, the year a peace deal was
signed with the farc, the country’s biggest rebel army, other armed groups have
driven a growing number of rural people from their homes and murdered hundreds
of local leaders. Colombians also blame the government for mishandling the
pandemic.

Indeed after Mr Duque withdrew the reform, the protests became far more violent.
The government has been chided for its excessive use of force. An armoured vehicle
was lmed in Bogotá ring live ammunition in a residential neighbourhood. The
ombudsman is investigating the disappearance of around 40 people.

On May 4th Mr Duque said he would set up a “forum for national dialogue”, where
the government will meet protesters and other civil groups. As The Economist went
to press, it seemed that some of the protesters would meet with the government on
May 10th. But as their list of demands has grown longer—to include withdrawing a
health-reform bill, introducing a guaranteed minimum income and an end to the
forced eradication of coca crops, among other grievances—so too has the likelihood
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5/10/2021 Protests in Colombia derail an important tax reform | The Economist
that they will not leave the streets.

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All this will make Mr Duque weaker. Unlike his predecessors, he does not have a
stable majority coalition in Congress. Even his mentor, Álvaro Uribe, a former
president, has distanced himself from Mr Duque; he was one of the rst to speak
out against the bill.

Gustavo Petro, a left-winger, is gaining momentum in the polls. He lost against Mr

Duque in the presidential elections of 2018, but is planning to run again next year.
He has proposed that the central bank print more money to deal with the aftermath
of the pandemic, and has praised the late Hugo Chávez, the despotic socialist who
set Venezuela on the path to ruin. Instead of a bold tax reform, Mr Duque’s legacy
may instead turn out to be ensuring that Colombia gets its rst socialist president.
7

A version of this article was published online on May 3rd, 2021

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