BOGOTA, Nov 20 (Reuters) - A group of Colombian lawmakers has proposed taxing dividend payments as the Andean nation weighs reforms to prepare for expected budget shortfalls in coming years, but the government says the move would deter investment.
The tax proposed late on Wednesday by the members of Congress’s economic commissions would substitute for or reduce a levy on wealth payable by individuals, although companies would continue to pay that charge until it is scrapped altogether in 2018.
The 10 percent proposed tax would apply to dividends of 42 million pesos ($19,473) per year or more.
The government strongly opposes the idea and said it would not be included in a tax reform bill Congress will discuss next week. That means the dividend tax would have to be proposed as separate legislation.
“We don’t need the government’s OK or for them to look favorably upon new taxes,” said opposition Green Party Senator Antonio Navarro, who is leading the proposal for the new tax. “The Congress can approve it independently.”
The government expects to face a revenue shortfall against expected spending of 53 trillion pesos ($24.6 billion) over the next four years, due in part to falling oil output and prices. The nation produces 1 million barrels of oil per day.
The reform bill as it stands would extend a tax of 0.4 percent on financial transactions and tax companies and individuals with wealth totaling more than 1 billion pesos, prolonging a similar wealth tax that expires at the end of 2014 but renaming it a “riches tax.”
The bill, which must be approved before the end of this year, also proposes a profit tax, known locally as CREE, on profits above 1 billion pesos a year.
The draft legislation also introduces a criminal sanction for those who do not declare assets owned abroad and above 8 billion pesos ($3.7 million). The penalty would be a prison sentence of between three and nine years.
$1 = 2,156 Colombian pesos Reporting by Carlos Vargas and Nelson Bocanegra; Writing by Peter Murphy; Editing by Lisa Von Ahn