New Colombian President Gustavo Petro has proposed exempting gambling taxes from his planned tax overhaul, seemingly leaving them at their current rate of 20 percent.
Petro, who is the first leftist President in Colombia’s history, is making good on his campaign promise to redistribute wealth with his reform plan, which will significantly alter so-called “occasional gains” taxes.
It was rumoured before this announcement that the gambling winnings tax would be increased to 35 percent, so much so that new finance minister José Antonio Ocampo gave a radio interview denying it last week.
Now that the plan is public, it turns out that Petro intends to alter the overall occasional gains tax rate to between 10 and 39 percent, on a sliding scale depending on the amount of money involved and where the “gains” come from.
Although other occasional gains will be increased, gambling, according to the documents released, appears to be largely unchanged.
According to the published text of Petro’s planned reform: “In the case of payments for the concept of lottery prizes, raffles, bets and similar, the individuals or legal entities in charge of the payment, shall apply a withholding at source rate of twenty percent (20%) at the time of payment.”
Article 304 reads: “Occasional earnings are considered for taxpayers subject to this tax, those from lotteries, prizes, raffles, bets and the like.” Article 317 adds: “The tax rate on occasional gains from lotteries, raffles, bets and similar is set at twenty percent (20%).”
Finance minister Ocampo insisted that the tax overhaul is only meant to level the playing field and tax the richest 2 percent of citizens in the country, as Colombia has long struggled to tax its citizens who participate in a largely cash and gig economy.
“This should not be viewed as a punishment or a sacrifice, it is simply a solidarity payment that someone fortunate makes to a society that has enabled them to generate wealth,” said Petro.
Colombia’s current total tax collection is about 19 percent of GDP, which is significantly below the Organisation for Economic Co-operation and Development (OECD) average of 33 percent.