Tax Reform

Argentina's income tax debate intensifies

In light of the upcoming 2017 legislative elections 2017, Sergio Massa's (Frente Renovador) proposed income tax bill is becoming embattled (Clarín, 1 December 2016). Finance Minister Alfonso Prat-Gay, who had previously encouraged the measure has stated bill might not viable, while toughening the limits of the negotiations (TN, 1 December 2016). Besides the Government opposition to this measure, ALEARA union workers have expressed concern over the negative impact this initiative might have (Clarín, 1 December 2016). 

Correa sends Capital Gain Law to National Assembly for approval

President Rafael Correa sent the Capital Gain Law, a law to avoid speculation over the value of land, and tax fixation, to the National Assembly for approval (El Telegrafo, 1 December 2016). The proposed law intends to tax the extraordinary gain in the transferring of property, which will be determined in general terms by the difference between the transferring value and the value of the acquisition. President Correa argued that historically, a small fraction of society has obtained extraordinary capital gain illegitimately stemming from the speculation in property ownership. Guayaquil's Mayor and opposition party leader Jaime Nebot (Partido Social Cristiano, PSC) believes this law has communist roots and is homage to the recently deceased Fidel Castro (El Universo).

ICEFI concludes Costa Rica suffering unsustainable fiscal situation

Experts from the Instituto Centroamericano de Estudios Fiscales (ICEFI) presented a report on the effectiveness of tax incentives in Central America and provided strategies on ways to improve tax collection (CB24, 20 October 2016). The ICEFI found current budget projections for Costa Rica in 2017 to be insufficient both medium and long-term and poses a risk to social achievements (CentralAmericaData). Among the issues cited, the study found spending without accurate source funding, insufficient tax collection, public spending adjusted to paying public debt, a need to institutionalize transparency and accountability, and chronic political inability to achieve comprehensive tax agreement amid a persistent fiscal deficit. The fiscal problems in Costa Rica are the result of structural shortcomings, both a lack of income and growing public spending, and requires legal changes.


Colombia moves forward on tax reforms

On 19 October 2016, the Colombian Congress began reviewing proposed tax reforms, with the possibility of ratifying the changes (Semana). The proposed tax changes include eliminating the sales tax on medicine and school supplies as well as basic food basket staples (El Pais). Finance Minister Mauricio Cárdenas assured the public the reforms do not affect the pensions (El Pais). If approved by Congress, the VAT will be increased from 16 to 19 percent on all other products and services. The tax increase is expected to collect more than 12 billion pesos or US$4 million (Semana).