The Colombian Senate’s economics committee rejected the government’s proposed 2025 budget, citing concerns that the country will be unable to generate the anticipated revenue due to lower-than-expected tax collection. This decision came despite the finance ministry’s presentation of a new fiscal reform proposal intended to raise an additional 12 trillion pesos (US$2.8 billion) to fund the budget.
As part of the reforms the government is looking to tax online gambling platforms similar to the taxes already imposed on physical establishments dedicated to gambling, which currently face a VAT of 27%.
However, the majority of lawmakers on the economic commissions in both the Senate and the lower house, who were reviewing the proposal together, deemed the government’s efforts to increase funding including initiatives to address tax evasion and avoidance as unrealistic.
President Petro stated that he would implement the budget by decree if Congress fails to approve it. The Senate’s economic commission ultimately rejected the budget proposal by a vote of 12 to 1, rendering a vote by the house committee unnecessary.
The government presented its new tax reform project to Congress aimed at covering a deficit of 12 trillion pesos in the 2025 budget. Among the new features of the proposed law were tax increases on gambling platforms and hybrid vehicles, as well as an increase in the carbon tax.
“This is a law intended to complement the financing of the 2025 budget for 12 trillion pesos and has three main pillars: First, incentives for economic reactivation; second, the identification of new sources of tax income; and third, an adjustment to the fiscal rule,” explained Finance Minister Ricardo Bonilla in statements to the press.
Congress must approve the 2025 budget in the coming weeks, despite opposition from the majority of opposition groups who insist that the deficit is larger than the 12 trillion pesos stated. “If Congress does not approve the budget, the Constitution states that the Government will decree it,” Petro warned.
The Colombian Federation of Games of Chance and Gambling (Fecoljuegos) has rejected the possibility of imposing a 19% VAT on online platforms in Colombia amid the tax reform proposed by the Petro government as has the Colombian Association of Gaming Operators (Asojuegos).