What Jumps Out: Colombians Out On The Streets

Impossible this morning to ignore events around Colombia yesterday – despite the courts banning the protests surrounding the Tax Reform, 10,000s took to the streets – and they have promised to return today.

The size of the turnout appears to have surprised most, including the security services who lost control at various moments, however given that people have been cooped up on and off for over a year, perhaps the frustration simply boiled over.

The event was called to protest the tax reform, but it was a more general protest against the sitting government – it was also infiltrated by the usual rent-a-mob characters on the fringe who over the years have always appeared, with the consequential looting and violence that comes with the territory.

The vast majority appear to have protested peacefully but it is the shocking images of violence and vandalism that will stick with most – the protesters clearly considered it a success as they announced last night that there would be a repetition today. Tomorrow is a lock-down in the major cities and on Saturday we have the May day holiday which may lead to more events.

The people taking the most notice will have been those who are sat in Congress and who have now begun to debate the tax reform – especially Finance Minister Carrasquilla, who along with President Duque saw his image displayed in most unflattering terms across much of the country. Already we have heard the Vice Finance Minister saying that the target total may not be US$7.7 billion but US$6.5 billion however there are also press reports that proposed VAT on gasoline, funerals and utility bills will be lowered or scrapped.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

That is likely to only be the start of the watering down process. Duque’s own party (Centro Democratico) again repeated their call for the Tax Reform to be withdrawn and to be re-written and in Congress a broad alliance of opposition parties has made the same call. If you are a Congress member facing re-election in mid-2022, even if you are in favor of the reform, you are going to tread very carefully over the coming months.

If this was any other year perhaps it would be withdrawn or watered down in order not to offend anyone however this is not any other year – there is no option. As mentioned by others, this is the first real tax reform for many years – it actually looks at structural change, especially on income tax, they are moves that need to be made. That is before mentioning the fiscal hole the government are staring into – it has to be filled – or at least filled to a sufficient extent that Moodys, Fitch and S&Ps will give Colombia the benefit of the doubt going forward. The room for slippage is marginal.

Into this mix we have to throw the COVID situation – firstly the root of much of the frustration was the government’s response and secondly the concern about the gathering of so many on the day when the number of deaths recorded (490) hit a new high. Most protesters wore masks, the one time when they suited everybody but nonetheless, hospital intensive care units, which are at over 90% capacity, will be nervous about the coming days and weeks, especially with protests set to continue.

If you strip out the deplorable protagonists of violence, whose sole purpose seems to be to distract from the main message – it is hard not to be sympathetic to those who have suffered over the past year. However, the tax code needs a shake up and the government is struggling to get that message over and this is due to decades of distrust between the populous and those in power.

This is set to be a crucial couple of months for the government – but more than that for Colombia. Administrations come and go but the country needs to move forward, and the failure of the tax reform is currently threatening the short-term future of Colombia.

Above photo: Rupert Stebbings