The Congress of the Republic has made way for the new tax reform project of the Petro government, which seeks to raise more than $16 billion to finance part of the State General Budget (PGN) for 2026. This is the second in a row of this kind to fall, since the institution sank in December 2024 the project presented by the Ministry of Finance.
On the night of November 26, after more than four hours of discussion, the economic committees of the Senate and the House of Representatives did not agree to the negative offers made, on the one hand, by the representative of the House of Representatives, Catherine Miranda, of the Green Alliance Party, and the representative of the House of Representatives, Jorge Méndez, of the Radical Party of Cambio.
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The Chamber’s Third Committee rejected the two proposals to archive tax reform. Voting in favor of the Miranda proposal resulted in 15 votes against the proposals and 7 votes in favor. While the other, proposed by a group of members of Congress from this section, 7 voted “yes” and 12 voted “no.”
Regarding the Chamber’s Fourth Committee, a quorum was not reached to make the decision, so at approximately 9:05 p.m., the session was adjourned, with the General Secretariat meeting on Tuesday, December 2.
Before the November 26 session President Gustavo Petro had said that if the proposal collapsed, Colombia could join shortening To fulfill your obligations, A situation that I will seek to avoid “at all costs”.
According to the president, the financial situation was exacerbated by the gasoline subsidy that was implemented in the previous government and continued in the first years of his administration, representing an expenditure of one billion dollars in three years. For this reason, he highlighted the urgent need for fiscal measures and held the Congress of the Republic responsible for deciding between approving new taxes on the rich or bearing the consequences of greater financial deterioration.
However, the bill, which included four proposals (one archival, two negative, and one positive), always had more votes against than votes in favour. For example, former Vice President Germán Vargas Lleras, leader of the Radical Change Party, asked the Congress of the Republic to cancel the initiative.
“Members of the Senate and Representatives: There are only two effective weeks left in the Legislature. The whole country is waiting for you. power. Resistance to prevent Petro from achieving his goal“, wrote in X.
Likewise, Senator Carlos Misel, from the Democratic Center, warned of the potential consequences of the new tax burdens on the middle class, formal workers and the oil and gas sector. He stated that the legislative process for reform was “flawed” because “the project was announced without verifying a quorum in the four economic committees,” despite many members of Congress calling for this review.
According to the senator, the government is “doing everything in haste” by deleting basic parliamentary procedures.
He said that citizens had reached the limit of their ability to tax, and that “this country cannot afford half a tax more.”. He stressed that the middle class was “strengthened by effort” and that neither those who declare income nor the productive sector can bear new taxes. He also urged that the discussion focus on the current economic situation and the tax burden faced by residents.
The tax reform project witnessed several amendments to begin the process in the Congress of the Republic in an effort to achieve a balance between financial needs and their impact on productive sectors and families. Although the main structure of the articles was preserved, the Minister of Finance, Germán Ávila, reported that five articles had been abolished and 12 had undergone substantive modifications.
Among the most notable deletions were articles related to the value-added tax on fuel. The presentation explains that Articles 5, 6 and 8 were withdrawn because members of Congress expressed concern about “the impact they could have on the price level of the economy.” Article 80 relating to the transitional regime was also abolished when it was decided that there would be no changes to the VAT on petrol and ACPM.
The following were also excluded:
- Article 13: He suggests imposing taxes on the commercial activities of churches, considering that “there are many difficulties in distinguishing between activities related to worship and commercial activities.” It was said that these organizations carry out social work that justifies maintaining the current tax treatment.
- Article 15: It seeks changes to personal income tax with effect from 2027, and was excluded for not establishing immediate collection. Article 25, which proposed a consumption tax on leisure, cultural and sporting services above 10 UVB, was also withdrawn after warning that it could harm tourism, a sector that had expressed concern about the potential impact of several simultaneous tax measures.
- Article 9: Redefines the 5% VAT rate applicable to certain goods. The change proved that only “full hybrid cars, whether electric or not” will maintain this rate, while the rest of the hybrid vehicles will move to the general rate, with the aim of directing the shift towards cleaner technologies.
- Article 14: The increases for the financial sector were amended and the paragraph on oil and coal was cancelled. The tax increase was maintained for banks only, with the aim of equalizing its effective rate with the rate of other economic activities.
The text provided includes further adjustments to items such as spin-offs, blocking at source and beer consumption. On that last point, the specific ingredient has been reduced from $330 to $198 per bottle By value Decreased from 30% to 15%, while maintaining collection targets. Protection measures have also been adopted for small artisanal producers, allowing natural persons not liable for VAT to be excluded from the new tax.
Other variations establish precise rules for the temporary reduction of fines and interest, changes in official obligations and the redesign of VAT formulas on fuel. On the other hand, the tax normalization rate increased from 15% to 19% and the exceptions were revised to reflect changes in dependents, dividends and the inflationary component, as they will not generate revenue in 2026.
The document included two new articles: the first redefines the VAT exclusion for postal shipments, limiting it to parcels with a value of less than 50 US dollars; The other It ordered that the income generated by the law be included in the current budget to ensure a balance between revenues and expenditures.