Colombian President Gustavo Petro’s tax reform plan has passed the Senate and the House of Representatives, implementing only minor changes to the occasional gains tax that applies to gambling winnings.
Petro, Colombia’s first modern democratically elected leftist President, made the tax reform a centrepiece of his election campaign as he consistently called for taxes to be raised for the wealthier classes.
There were rumours before the 132-page Bill 131/2022 was first introduced that the increases to occasional gains tax applied to gambling winnings could ultimately be as high as 35 percent, but in the end, the changes have been minimal.
“The funds paid by the gambling industry to the government are part of an important source for the health system, which is one of the key elements of the social benefits and welfare of Petro’s government projects,” Juan Camilo Carrasco, a gaming lawyer at Asensi Abogados in Bogota, told VIXIO GamblingCompliance at the time the changes first became evident in August.
The text has rearranged a few articles but the 20 percent withholding tax rate for occasional gains remains the same.
In August, the Ministry of Finance published an explanatory memorandum, which essentially called the blanket occasional gains tax unfair: “On the one hand, occasional gains are taxed at rates lower than the maximum marginal rate of the general income tax rate, which affects the principle of equity. While the general tax schedule has a table of marginal rates with a maximum rate of 39 percent, occasional gains are taxed at rates lower than the maximum marginal rate ... at rates of 10 percent or 20 percent depending on their nature. This differential treatment implies that two persons with the same level of income can contribute different amounts for receiving different amounts of income.”
According to the bill’s rapporteur, Senator Juan Carlos Garcés Rojas, more than 250 hours of work was put in before consensus was reached on the tax reforms. He called it a project of “special importance ... and sufficient dialogue and discussion have been allowed to advance a project of vital importance for the country”.