Political Risk Latin America Blog @PolRiskLatam

Analysis: Colombia’s Santos under pressure over tax vow

Posted in Political Risk by politicalrisklatam on August 31, 2010

by Javier Mozzo for Reuters, August 30th, 210.

Colombian President Juan Manuel Santos could find himself in a fiscal straitjacket after vowing not to raise taxes to preserve growth, while simultaneously risking a deeper public deficit by boosting spending.

Santos, a British and U.S.-trained economist who came to office this month, promised to leave taxes untouched because his government estimates economic growth of more than 6 percent will cover state spending.

But experts debate whether Santos has slammed the door on a vital option to finance government programs that stimulate development, especially as the Andean country plans reforms in health, infrastructure, education and justice.

“In any presidential campaign there are phrases that end up with unforeseen consequences,” local analyst Mauricio Reina wrote in a newspaper column. “In the case of Santos, the tax promise has become a straitjacket in one of the key challenges of the government: public financing.” (continue reading… )

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