President Ivan Duque withdrew a plan to raise taxes on many Colombians after it triggered days of bloody street clashes and a political crisis.
Duque is giving up on some of the most unpopular ideas, such as extending the value-added tax to additional goods and services and making more people subject to income tax. Colombia needs to raise
revenue to defend its investment-grade credit rating and address a surge in poverty caused by the pandemic by funding social
programs and providing cash transfers for its neediest citizens.
The president called on lawmakers to urgently reach consensus around a new proposal to help the country climb out of a worsening fiscal hole.
The nation’s bonds and currency weakened in recent weeks after the government’s plans were rejected by virtually the entire political establishment, including Duque’s own party.
The decision to abandon the bill less than three weeks after it was introduced is another blow for Duque and undermines chances he’ll be able to pass other reforms before his term expires next year, said Sergio Guzman, director of Colombia Risk Analysis.