BOGOTA, Dec 19 (Reuters) - Colombia's Congress gave the
green light on Wednesday to a controversial bill that aims to
streamline the country's complicated tax system but at the cost
of reducing government tax receipts going forward.
Adjustments to President Juan Manuel Santos' tax proposal
were seen as a bitter pill for his administration, which had
wanted a reform that was revenue neutral for Latin America's
fourth-largest economy.
To get the tax reforms passed, Santos' government was forced
to call extra sessions of Congress and the president interrupted
regular television programming twice in the last month to
explain the reform to Colombians.
Finance Minister Mauricio Cardenas said that modifications
to the original government bill would cut annual tax collections
by about $280 million.
Despite the changes introduced by lawmakers, the government
welcomed the bill's passage.
"This reform will allow us to stop being one of the most
unequal countries on this continent ... it's a reform that will
allow Colombia to move formal employment generation forward,"
Cardenas said after the reform was approved.
"There'll be a reduction (of tax receipts), that is the cost
of the reform, but we believe that it's a cost that's worth
incurring because there are big benefits."
Much of the specifics of how the new law will turn out are
still up in the air since the Senate and House must now
reconcile their texts before it goes to Santos to sign into law.
Santos' government said the original bill's purpose was not
to change the amount of revenue the state takes in, but to
simplify taxes.
Critics said that the reform did not go far enough and that
large corporations should pay more taxes to help fund social
spending and reduce inequality in the Andean country.
"The more I think about it, the more sure I am that Santos
is imposing the worst tax reform in the history of Colombia.
None had dared to something as plutocratic," leftist Senator
Jorge Robledo said in a message on Twitter.
The bill is part of a range reforms pushed through Congress
since Santos came to power in 2010, including a fiscal rule to
make it a constitutional requirement for a balanced budget and a
change to the way oil and mining revenues are distributed.
Colombia is attracting record investment inflows, its
economy is expanding strongly and tax receipts are at historic
highs thanks to a U.S.-backed military offensive against leftist
guerrillas and drug gangs.
But it remains one of the countries in the region with the
greatest social and economic inequalities.
(Reporting by Carlos Vargas, Nelson Bocanegra and Jack Kimball;
Editing by Lisa Shumaker)