Colombia’s New Left Government Unveils Wealth Taxation Plan to Alleviate Poverty

Opinion: The Left will have to do far, far more than simply rely on utopian taxation politics, the results of which could lead big capital to simply move abroad.

Guardian reports: Colombia’s new president Gustavo Petro has proposed an ambitious plan to tax the rich in an effort to combat poverty in one of the most unequal countries in the Americas.

If implemented, the Piketty-esque legislation proposed by Petro could potentially raise more than $11.5 billion annually to fund anti-poverty efforts, free public university and other social welfare programs.

Petro, a former urban guerrilla who became the country’s first leftist leader, rose to power on a raft of promises centered around social progress at a time when the South American country is still plagued by pandemic-fueled economic turmoil.

If passed, the plan would raise taxes on the country’s highest earners – approximately 2% of Colombia’s population – cut tax benefits for the richest and fight tax evasion.

The tax hikes would progressively increase as income increases. It would add an annual wealth tax on savings and property above $630,000, and would add a 10% tax on some of Colombia’s biggest exports – oil, coal and gold – after prices rise above a certain threshold.

This should not be viewed as a punishment or a sacrifice,” said Petro. “It is simply a solidarity payment that someone fortunate makes to a society that has enabled them to generate wealth.

The wealth tax was among Petro’s chief promises during his campaign and would mark a significant step toward achieving his bold policy agenda, which has inspired hope in some and skepticism in others.

It is also part of a larger debate playing out around the world at a time of deepening global inequalities.

Petro’s proposal has prompted alarm in the country’s private sector and political elite who argue the tax will dampen investment and push job creators out of the country and—according to the arch-conservative former president Álvaro Uribe—potentially deepen poverty.

We support all these efforts for the country to overcome poverty,” Uribe said following a meeting with Petro this summer. “But not at the cost of withering away the private sector.”

Ironically, at the height of the country’s decades-long armed conflict, Uribe imposed a similar temporary tax in order to fund his war with the Revolutionary Armed Forces of Colombia (Farc) guerrilla group.

Last year, amid stewing resentment for Petro’s predecessor, Iván Duque, another tax reform proposal ignited months of anti-government protests, which became symbolic of deeper social unrest and endemic inequalities.

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