Colombia’s New President Wants To Eliminate Certain Gambling Taxes

In most cases, a government suggesting a reduction in taxes is an unheard-of anomaly. However, Colombia’s new president, Gustavo Petro Urrego, is doing just that, submitting a proposal to reduce certain gambling taxes.

Gustavo Petro Urrego, Colombia’s new president, after casting his vote in the recent elections. The new leader wants to make sweeping tax changes, including a reduction in tax requirements for certain gambling earnings. (Image: Getty Images)

Petro, a former economist who was sworn in Colombia’s president a couple of days ago, has a novel approach to collecting more money for state coffers. He wants to raise the tax on the “ultra-wealthy,” while cutting tax obligations on “occasional” gambling winnings.

The country’s Congress now has the tax reform bill, developed in conjunction with inbound Minister of Finance José Antonio Ocampo. It’s one of the first initiatives it received under Petro’s leadership. As such, any decision could be a statement of support – or rejection – of his authority.

Reforming the Country

Petro, who ran for president in 2018 but lost, now advanced to the Presidency on a platform of economic reform. He touted his ability to transform the country’s impoverished population as he promised to add around $50 billion to the government over the next four years. The money, he stated, will finance social programs against poverty and inequality in Colombia.

The central point of his tax reform focuses on the upper echelon of Colombia’s society. It proposes an increase in the income tax that they pay. In this case, referring to this sector as the “really rich” sector, a tax of 0.5% would apply to anyone whose net worth is above COP3 billion (US$695,000). Above COP5 billion (US$1.15 million), the rate is 1%.

In addition, Petro promises to combat tax evasion, which costs the country around $11.5 million a year. To do so, his tax proposal will eliminate certain exemptions companies have received, while increasing the taxes on exports of coal, gold and oil.

There’s also a new tax, similar to what other countries have introduced. The so-called healthy tax will increase the price of soft drinks and other sugary drinks, ultra-processed foods and single-use plastic.

While the proposal suggests several tax increases, it also recommends reductions. For example, Petro wants to cut the tax rate on winnings of dog and horse race betting, as well as income from lotteries and certain forms of gambling. Currently, winners give up 20% to the government through taxes.

These are “unjustified” taxes, according to the proposal, and Congress should approve their elimination. Along with that, Petro suggests eliminating a tax on profits from the sale of shares listed on the Colombian Stock Exchange. This comes with a caveat, though, as the savings would not apply if the gains are more than 10%.

Colombian Gaming on the Rise

Earlier this month, Coljuegos, reported that the total collection from licenses for games of chance registered year-on-year growth of 14% in the first half of the year. This amounted to COP384 billion (US$89.3 million), a 7% improvement over the gaming regulator’s expected results for the period.

Land-based gambling was worth COP151 billion (US$35.1 million), or 42% of the total. iGaming accounted for COP113 million (US$26,272), 30% of the total and a year-on-year increase of 32%.

The proposed tax cuts on gambling, which Petro’s proposal didn’t quantify, would take away part of that revenue. However, offsetting the loss would be the income tax increases.

Colombia’s Congress has not yet responded to the initiative, but finding approval will face certain challenges. Ivan Duque, Petro’s predecessor, tried to introduce tax reforms that included higher tax rates twice during his term.

On both occasions, the results were massive anti-government protests across the country. There are already concerns that certain taxes, such as the healthy tax, disproportionately targets lower-income segments. As a result, Petro and Congress may not be on the same page.

The post Colombia’s New President Wants To Eliminate Certain Gambling Taxes appeared first on Casino.org.

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