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Friday, Mar 01, 2024

Colombia oil, tourism industries warn tax reform may have negative impact

Colombia oil, tourism industries warn tax reform may have negative impact

Representatives of Colombia's oil, mining and tourism industries told opposition lawmakers on Monday a $5.7 billion tax reform proposed by the government of leftist President Gustavo Petro could put their sectors at risk.
Petro, who took office early this month, has said he is willing to negotiate on the reform, which seeks to raise 25 trillion pesos in 2023 to fund anti-poverty programs.

The bill would levy a 10% tax on income earned when coal and oil are exported for prices exceeding a certain threshold, though a proposal to include gold exports has been withdrawn.

The threshold for oil would be $48 per barrel, while coal exports would see the duty levied when prices exceed $87 per tonne.

"The tax reform as it's proposed puts at risk the viability of many exploration and production projects in Colombia, and with them our energy self-sufficiency," said Francisco Lloreda, the head of Colombian Petroleum Association, at an event hosted by lawmakers form the right-wing Democratic Center party.

"Not allowing what companies transfer to the government to be deducted from royalties, plus the export tax that is being proposed, would mean this industry will end up paying 24% of the reform," Lloreda said, estimating oil companies' taxes could increase by 65% to 80%.

The reform has profound impact on mining, said Juan Camilo Narino, head of the Colombian Mining Association (ACM).

"It compromises job creation, it compromises investment," Narino said, adding minerals are necessary for the transition to renewable energy.

Proposed duties higher than the normal value added tax of 19% on travel packages could damage tourism, which has not yet recovered to pre-pandemic levels, said Paula Cortes, the president of the Colombian Travel Agency and Tourism Association.

"Taking away tax benefits for tourism means we will not see a swift reactivation," Cortes said.

The head of the Colombian Agricultural Society, Jorge Bedoya, hailed the reform for not levying higher taxes on basic food, but warned potential labor reforms floated by the administration could have negative consequences.
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