The Plenary of the Legislature will begin to debate the Bill from Tuesday.
With six votes in favor and three abstentions, the Economic Development Commission of the National Assembly approved on November 13 the report for the first debate of the draft Organic Law for Economic Development and Fiscal Sustainability after the COVID-19 pandemic. He did so with adjustments to the original proposal of the Executive.
One of the changes is to deductions for personal expenses for the payment of income tax. The new proposal would allow to increase these deductions to fourteen basic baskets (approximately $ 10,000), with an adjustment in the deduction quota for these. In the project that the Executive entered the Assembly, seven baskets were established.
The approved report indicates that in this way the concern about the disincentive for the use of invoices is addressed, and the lower limit in which the new contributions to the IR would generate an affectation with respect to the current regime is increased, but at the same time the generation of permanent income, with a modest collection cost of approximately $ 15 million compared to the original proposal.
The project that is being processed in the Assembly is of an urgent nature in economic matters and it is expected that it will be known and debated by the plenary session of the Legislature next Tuesday and Wednesday.
The Commission stated in its report that “there is consensus on the need to generate permanent resources for the general budget of the State and that the collection effort should fall on those economic agents with greater economic capacity. However, there is no consensus on how to generate these resources ”.
The bill proposes a strategy to strengthen budget income through a series of adjustments to taxes, 30 deductions and fees, with the aim of generating permanent and temporary income to achieve the sustainability of public finances between 2023 and 2024 .
The reform was subjected to a socialization stage in which 96 citizens appeared, including unions, organizations and public and private actors linked to the matter.
In those days, concern was raised among several interlocutors who appeared in the Assembly about the decrease in the ceiling for personal expenses. They argue that said change could have a negative impact on the formalization of the economy, by discouraging the use of invoices.
“The different proposals to the original text presented by the Executive have aroused uncertainty regarding the fiscal impact of these changes,” the report indicates, adding that what is proposed is “a disincentive towards formality and deteriorates the current tax culture.”
The document mentions that from the agricultural sector, in front of the patrimonial tax, it is suggested to make a differentiation for the tax on agricultural lands and urban properties, as well as companies or people that did not have favorable results or reduced their income in 2020.
He adds that from the academy it was highlighted that a tax reform is necessary due to the existence of a high fiscal deficit and that deductions for personal expenses should be preserved and a new income tax table is recommended so that it affects the most segments to a lesser extent. low taxpayers.
Civil society proposed, for its part, a gradual income tax scheme where there are various levels of reduction.
The independent assemblyman César Rohón stressed that “eliminating personal deductions will directly affect families with limited incomes and will promote informality.”
Carlos Zambrano, assembly member of the Unión por la Esperanza (UNES) alliance, stated that “the change in the calculation methodology seriously harms people who earn between $ 2,000 to $ 4,000, who are mainly professionals, which is unacceptable, since the cost of the crisis should not fall on this group of people ”and requested that articles 40 and 43 of the current bill should be discarded, as well as all the repealing articles of the bill that reform the current the rent.
“The modification of the personal expenses scheme proposed in the project is taxed in a greater proportion to people who earn between $ 2,000 to $ 4,000 per month. The tax increase applies higher increases to the segments with the lowest relative income, which is clearly not progressive and causes the burden to be more concentrated on those who earn the least, ”the report states and highlights that many examples of this problem have been presented in the appearances.
The Commission also indicates that after listening to the observations of various sectors “adjustments have been proposed to the tables in Articles 5 and 9, which stipulate the bases for the special contribution of natural and legal persons, respectively.”
- In the case of natural persons, the new table includes greater progressivity by including more levels, basic fractions and marginal rates.
- In the case of legal entities, the threshold for the contribution for companies with equity of $ 4 million is lowered and a new level is added with progressive rates.
- These changes represent a fiscal cost of approximately $ 10 million over the original proposal.
Also picking up the concerns of some observers, the Executive has decided to clarify in the text the fact that the modifications proposed in this law do not affect the exempt nature of habitual income such as tenths and some profit shares.
The reforms proposed to the Hydrocarbons Law, beginning with Article 131, were also of particular concern. The legislative board decided to eliminate them since it considers that a greater analysis and debate is required, within the treatment of a new bill.
The Executive proposed increasing private participation in the oil sector and promoting the importation of petroleum derivatives. However, there are criticisms regarding the potential impact on State revenues and the introduction of new contractual forms.
According to the provisions of Article 140 of the Constitution of the Republic, emergency bills on economic matters must be approved, modified or denied within 30 days. The deadline for this project is Saturday, November 27. (I)
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