President Gustavo Petro announced Monday, during a Cabinet meeting, that his government will present a new tax reform to the next Congress, which will be sworn in on July 20 following the March legislative elections.
The initiative is part of a package of structural changes that the administration aims to revive in the final stretch of its term, after the political obstacles several of its proposals faced in the current legislative period.
In the same address, the president confirmed that he will also introduce a new health care reform, one of the most controversial projects of his administration, on which there is no political consensus despite the deep crisis the system has endured for two decades.
Petro reiterated his intention to fundamentally transform the current model and delivered a strong message about the future of health insurance providers, warning that those that are bankrupt will have to be liquidated without the state assuming their debts.
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Petro to resubmit health and tax reforms to Colombia’s new Congress
The announcement of a new tax reform shook Colombia’s already turbulent political environment and laid the groundwork for the government’s fiscal strategy—amid a growing public deficit—after it had already pushed through an ambitious overhaul of the tax system at various points during its term.
Although the details of the new proposal are not yet known—the fifth in four years—Petro made it clear that the goal is to adjust public finances in a context of increasing budgetary pressures and social commitments that require greater resources.
The president said the country needs to strengthen its revenue-raising capacity to sustain social programs, infrastructure investments, and energy transition policies. In that sense, he anticipated that the proposal will seek greater progressivity, suggesting it could once again focus on imposing higher taxes on higher-income sectors and certain economic activities.
Gustavo Petro will present his proposal in July, once the new Congress has taken office and just weeks before the end of his presidential term, which expires on August 7.
Despite the fact that the balance of power in Congress remains unchanged after the March 8 elections, the government hopes the new legislature will allow it to move forward with less resistance on initiatives that previously faced blockages or delays.
Alongside the tax reform, Petro confirmed he will push again for a transformation of the health care system. The previous bill sparked a broad national debate and failed to advance as the administration had hoped, so the new version would seek to incorporate lessons from that process, though without abandoning the structural changes proposed by the government.
The president has defended the need for a model more focused on primary care, with a stronger state presence and less financial intermediation. In his remarks, he reiterated that the current system has deep flaws in coverage, quality, and sustainability, which would justify a far-reaching reform.
However, the announcement of a new proposal also suggests that the debate will continue to be one of the most sensitive issues in Colombia’s political landscape. Different sectors have warned about the risks of abrupt changes to a system that, despite its problems, covers the majority of the population.
The EPS system in crisis: liquidation of bankrupt companies
One of the most forceful points of the presidential announcement was his stance on EPS—private companies that manage the health system in Colombia—with financial problems. Petro stated that all entities that are bankrupt will have to be liquidated, drawing a clear line regarding the situation of several companies in the sector facing economic difficulties.
The president emphasized that the state will not assume the accumulated debts of these entities, which, according to his estimates, amount to about 50 trillion pesos (approximately US$13.5 billion). This figure reflects the magnitude of the crisis affecting part of the health insurance system and points to a complex scenario if the liquidations materialize.
“What would indeed be suicide for Colombia is to take 50 trillion pesos from the government to transfer them to pay the EPS debt, which is paying the debt to the private owners of the EPS; it is better that they be liquidated, at least we do not cause that damage to Colombia’s fiscal stability,” the president said during Monday’s Cabinet meeting.
The decision implies a significant change in how the government will address the sector’s crisis. Traditionally, the state has intervened in some cases to guarantee the continuity of services, but Petro’s stance suggests less willingness to financially rescue private entities.
The potential closure of bankrupt EPS raises questions about the impact on millions of enrollees who depend on these entities to access health services. Although the government has insisted it will guarantee care for users, the transition could create operational tensions within the system.
Health experts have warned that the mass liquidation of EPS could affect the continuity of treatments, the provider network, and the financial stability of clinics and hospitals. At the same time, some sectors believe that removing unviable entities is necessary to clean up a system that has been in a constant state of crisis and reliant on repeated public bailouts.
The debate over the role of EPS has been central to discussions on health reform. While the government questions their function as intermediaries, other actors defend their role in organizing the system and warn of the risks of eliminating them without a fully defined alternative model. The fact remains that, after nearly four years of debate, political agreement to redefine the health system has not been reached.
A new political showdown in the final stretch of the Petro administration
Petro’s announcements open a new chapter in the relationship between the executive branch and Congress. The simultaneous presentation of a tax reform and a health reform points to a high-intensity legislative semester, in which the government’s ability to build majorities will be tested, although some analysts point more to an electoral strategy, given the limited time this administration has left.
In a fragmented political scenario, like the one the new Congress will face after taking office on July 20, the executive will need to forge alliances and adjust its proposals to achieve concrete progress—something that will require time that the electoral calendar and constitutional timelines clearly seem to deny.
With these decisions, the government reaffirms, in the final stretch of its term, its initial intention to push for structural changes in key areas, even amid resistance, and which appear likely to depend more on the next administration to take office in Colombia on August 7 than on the current one.