Tax Hikes Needed for Peace in Colombia

October 9, 2014 Taxation in Colombia

BAGOTA – While the government of Colombia is looking to foster peace in the country, it now has to face the reality that it may need to raise taxes in order to fund the social programs needed to quell violence in the country.

While addressing the Senate of Colombia on October 9th the co-chair of the Peace Commission of the national Congress Roy Barreras announced that the government will need to spend approximately COP 90 trillion over the next ten years in order to successfully implement a peace deal with the country’s Marxist rebel group, the Revolutionary Armed Forces of Colombia.

He explained that in order to raise the funds necessary “…there will need to be adjustments, modifications, and we need budget reform, a structural tax reform for peace.”

Currently the government of Colombia has proposed to extend a selection of previous temporary tax hikes over the years between 2015 and 2018, in order to raise tax collections by an estimated COP 26 billion.

However some taxation experts have suggested that even if the tax hikes are extended, the government may not be able to raise all the necessary funds, as it is currently seeing a drop in revenues from oil, and may subsequently need to ask for another series of tax hikes in four years time.

In order to fully implement peace, the government believes that it will need to start several social programs to help former rebels reintegrate into society, while at the same time quelling any rises in criminal activity, and making larger societal reforms to increase political participation of rebels.

It is believed that while the initial cost of facilitating peace in the country may be high, the country will be able to prosper once the turmoil and violence is quelled.