The president of Colombia, Gustavo Petro, announced yesterday a new proposal for tax reform following the definitive rejection in Congress of the original version of his bill for 2026. In a political context marked by intense debates over the sustainability of public finances and tax fairness, the head of state presented a renewed initiative with a central objective: That “those who have more should pay more.”
This approach comes just days after the economic committees of Congress, controlled by the conservative opposition, decided not to approve the financing bill that accompanied the national budget for next year, which represented a legislative setback for the government and a presumed additional economic gap of 16 trillion pesos (approximately US$4.2 billion) for next year.
In his remarks, Petro linked the failure of the first bill to the persistent inequality in the distribution of wealth in Colombia and noted that the current tax burden does not reflect the real capacity to contribute of the most affluent sectors.
The president has defended the idea of progressive and redistributive taxation as a mechanism to strengthen the state’s coffers without disproportionately burdening the middle classes and companies that generate employment.
He also insisted that his new proposal will seek to consolidate a more equitable economy that is more robust in terms of revenue collection.
Colombia’s Petro promised new tax reform to redistribute wealth
The rejection of the previous tax reform generated a direct clash between the executive and Congress, especially because when the state budget for 2026 was approved, a pre-agreement was established — after the government reduced projected revenue from 26 to 16 trillion pesos — to pass a fiscal reform that was supposed to help reduce a growing fiscal deficit.
The original initiative, designed to raise funds to shore up the 2026 budget, was shelved for lack of consensus among lawmakers in an economic committee, without even being debated on the floor. The reason was that members of Congress considered some of its financing mechanisms insufficient or inappropriate.
For the government, this decision not only represented an obstacle to securing revenues but also a moment of political tension, as Gustavo Petro described the vote as a defense of the interests of the wealthiest sectors and a display of “political hatred” toward proposals that, according to him, sought transparency and fiscal justice.
The reform struck down in Congress sparked an intense public debate over the need to adjust Colombia’s tax system, which has traditionally depended on indirect taxes such as VAT and is characterized by its real inability to collect revenue effectively. In fact, a recent report by the Spanish newspaper El Pais says that tax evasion and avoidance by the wealthiest in Colombia is a structural phenomenon that deepens social inequality.
The journalistic work asserts that while the fortunes of the mega-rich have grown steadily over decades, their proportional tax contribution has stagnated or even declined. The result is a widening gap between wealth and poverty in a country where the richest 1 percent concentrates 40 percent of household wealth, while the poorest half owns barely 2 percent.
Petro and his advisers argue that this scheme collects less than what could be obtained through direct taxes on large fortunes and high incomes, while redistributing the responsibility of financing the state more equitably.
By contrast, some parliamentary and economic sectors warned of possible adverse effects on investment and competitiveness, underscoring the complexity of reaching consensus on such a sensitive issue, and one on which debates of this kind have rarely been held in the recent past.
The proposal: progressive taxation and social justice
The new tax reform announced by Petro revives part of the original spirit, but with an explicit emphasis on measures that intensify the progressivity of the tax system. The president has explained that his plan aims to ensure that those with the greatest resources contribute proportionally more to the financing of public services and social programs, while seeking relief for the middle class and the country’s productive sectors.
This approach seeks, in the administration’s words, to “correct historical imbalances” and expand the pool of resources to finance education, health care, and development projects without increasing the burden on the most vulnerable groups.
Petro clearly stated that the new initiative prioritizes Colombia’s so-called mega-rich, a term he uses to refer to large taxpayers with high incomes and wealth. According to the president, these individuals and entities have not contributed sufficiently to the public treasury relative to their economic capacity, which has deepened inequality and limited the state’s ability to respond to social and economic challenges.
Based on this diagnosis, the reform will seek to adjust tax rates and tax bases that would affect only this segment of the population with the greatest resources, without imposing additional burdens on workers or small- and medium-sized enterprises.
As explained by the article from the aforementioned Spanish media, it says that billionaires pay proportionally less in taxes than lower-income sectors, contradicting the perception that the tax burden falls primarily on the middle and upper classes.
The report also notes that the wealthiest sectors systematically employ legal and illegal strategies to reduce their tax burden. Reports from DIAN — Colombia’s treasury — reveal that most of those who took advantage of tax normalization mechanisms, admitting to having concealed assets, belong to the wealthiest groups.
With its announcement of a new tax reform, the Petro government seeks to reverse a situation that it says drags down the country’s fiscal prospects and ultimately reduces revenue collection and the subsequent redistribution of wealth.