What does Rodolfo Hernandez suggest in the areas of economics, labor and taxation?

(CNN Spanish) – Rodolfo Hernandez will fight for the presidency of Colombia in the second round of elections against Gustavo Petro. Whoever wins will be one of the main challenges to pull the country out of the social and economic crisis that has been exacerbated by the pandemic.

Just remember the violent protests that erupted in 2021 after a failed tax proposal that sought, among other measures, to raise value-added tax (VAT) on various products and services, which the government said was needed to cushion the blows of the pandemic.

Although Ivan Duque’s administration withdrew it, this was an opportunity to expand the demonstrations and millions of people took to the streets not only because of months of economic pressure but also because of the deep sense of inequality felt by many Colombians.

The Organization for Economic Co-operation and Development (OECD) concluded in its latest report that Colombia has one of the highest levels of poverty, income inequality and the informal labor market in Latin America.

Hernández’s proposals, distinguished by their simple and colloquial communication, have been criticized by politicians and experts who, like Pietro, also apply the label populist. Bruce McMaster, president of the National Association of Colombian Entrepreneurs (ANDI), noted that Hernandez’s tax proposal would make products more expensive and that some cost-cutting measures (such as reducing the number of embassies) would have an adverse cost internationally. The Javeriana University Financial Observatory says the same about Hernandez’s financial proposal: it would increase the cost of producing some goods and services. magazine The Economistwho notes that the stakes for Colombia with Petro and with Hernandez are many, says of Hernandez that his proposals are “poor in realism” and protectionism.

These are the main economic, labor and tax proposals of independent candidate Rodolfo Hernandez, if he wins the Colombian presidency.

What are the candidates talking about in Colombia ahead of the elections? 3:48

Investing in the countryside: produce and export more to reduce imports

“The countryside is Colombia’s salvation,” says Rodolfo Hernandez in a video posted on his social networks where he explains his intention to increase internal demand for goods and services to minimize imports and maximize exports.

candidate said in an interview with CNN in Spanish.

Under his government programme, he explained that in order to promote development in the countryside, he would design an incentive and investment policy with projects such as “self-construction of integrated villages and third roads by rural people”.

All seniors will receive a pension

Hernandez asserts that, by law, it “grants a pension to all seniors, regardless of whether they meet the requirements or not,” in the form of basic income. However, it does not specify how or where this proposal will be funded.

The independent candidate also says he will review implementation of the “tax burden on privileged pensioners” and that if he wins, he will reform Colpensiones – the state agency that administers pensions in the country – to allow it to compete with private money in generating investments.

Low VAT and no more tax reforms

Rodolfo Hernandez proposes the regulation of Qatar’s taxation with one main proof: a reduction in value-added tax.

The idea is to “make VAT payment so practical that taxpayers have no mechanisms to evade the obligation to the state. We propose to implement a general VAT rate of 10%, roughly half the current rate, keeping the household basket tax-free and reclassifying Other goods and services excluded.

The goal is to ensure collection and make administrative processes more efficient, if all taxpayers contribute 10% of the value-added tax, he says, then there will be a balance in financial matters.

In addition, he proposes creating a regional tax law to increase the base of regional tax revenue, “without alluding to new tax reforms.” In an interview with Noticias Telemedellín, Hernandez said: “As long as politicians keep stealing money, why tax reform?”

In his government programme, he says he will only redistribute resources and improve collections “where avoidance and evasion prevail.”

The independent candidate will also, if he wins the Colombian presidency, seek to abolish the 4 x 1000 tax. This is a tax that is levied in Colombia when making a financial movement in which for every 1000 pesos (25 cents on the dollar), you have to pay 4.

The new tax reform, the challenge for the Colombian government 2:53

Enhancing Entrepreneurs and Reducing Barriers to Entrepreneurs

One of Hernandez’s main proposals regarding job creation in the country is related to promoting entrepreneurship, especially digital.

To do this, the candidate proposes in his government program “Incentives” for start Digital Such as not paying taxes “until three years of continuous operation and performance are completed.”

It also says it will provide financial support and advice to young entrepreneurs. “Ultimately, it is about promoting a culture of self-employment (the self-employed person), but from a formal point of view,” he explains.

In addition, he asserts that he wants to reduce barriers to new entrepreneurs, “reform and simplify” the structure of procedures, taxes and renewal costs.

On the problem of unemployment and informal work

The Organization for Economic Co-operation and Development (OECD) reports that more than 60% of workers in Colombia work in an informal setting without being registered with Social Security, reducing productivity and tax revenue.

To get around the significant unofficial numbers, Hernandez suggests “deepening” the full entry into force of Section 108-5 of the Tax Code, under which employers who offer a first job can be taxed for people under the age of 28, in accordance with the laws.

manufacturing sector

Hernandez has proposed boosting manufacturing growth in his government plan, although he does not provide details of how he intends to do so.

Stefano Posippon, Natalie Gallon, Paulo Sandoval, Wilson Barco and Rossio Muñoz Lido contributed to this report.

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