President Gustavo Petro has chosen not to endorse the proposed law that aimed to institutionalize “Día sin IVA” (Day Without VAT) in Colombia’s national commerce. This decision came after Finance Minister Ricardo Bonilla expressed concerns about the bill’s constitutionality and practicality, leading to the initiative being returned to Congress.
As expected, this move sparked considerable debate, especially among critics of Petro’s administration, who questioned his decision. Following this, President Petro suggested an adjustment to the proposal for a second debate on the Day Without VAT initiative, indicating that he was open to a revised version that might align better with legislative expectations.
In his messages, Petro reminded lawmakers that, according to the Constitution, new tax laws require validation from the national government. He proposed a plan for three separate tax-free days — the first for all national food products, the second for food and textiles, and a third for essential goods, including solar panels and electric vehicles, regardless of whether they are national or imported.
Citing constitutional requirements, Petro emphasized that tax exemptions must be established by the National Government. He suggested that during the second debate, they could agree on specific categories for the tax-free days, placing focus on supporting the national economy and industries.
Echoing the president’s sentiments, Pedro Suárez Vacca, a representative from the governing coalition, pointed out that the proposed law was likely to face constitutional challenges. He emphasized that it was clear the exemptions needed to stem from the government, as outlined in Article 154 of the Constitution.
The reactions didn’t stop there. Fenalco, a national merchants’ association, voiced its displeasure at the decision. Jaime Alberto Cabal, the organization’s leader, claimed that the absence of the Day Without VAT will hurt organized commerce, particularly small and medium-sized businesses, and ultimately impact Colombian families and job creation.
In response to the criticism from Fenalco, Petro challenged the organization to eliminate the inclusion of imported goods in their proposals for the tax-free days, asserting that anything else would undermine national labor and production efforts.
The leader of Fenalco countered the government’s rationale, arguing that the assertion that the Day Without VAT only benefitted wealthier citizens was unfounded. He noted that such days allowed consumers from all socioeconomic backgrounds to access desirable goods, particularly mentioning the sales in lower-income areas that supported his argument.
Moreover, he highlighted that the increased VAT collection resulting from heightened sales far outweighed the fiscal costs associated with the tax exemptions, reinforcing the idea that the initiative had broad economic benefits.
This ongoing discourse reflects the situational tensions between government policy and commerce interests in Colombia, as stakeholders grapple with the implications of tax initiatives on their economic realities.
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