Bogotá`s Mayor Office presented for approval of the City Council a Marshall Plan for an economic recovery in the context of the Covid-19 crisis. Mayor Claudia López specified that this initiative seeks a program of tax incentives for the most affected sectors by the economic downturn and an increase in tax collection for wealthy classes.
This plan addresses the situation of a city with more than 8 million inhabitants and that currently is the focus of Covid-19 contagions in Colombia. Although the authorities’ response has been effective and the city maintains a low death rate per million inhabitants in comparison to other cities of The Americas, the macroeconomic effects of the crisis continue to hit the population.
Contenidos relacionados
This particularly affects vulnerable households, retailers, entrepreneurs, informal vendors and business in culture and entertainment. For this reason, the Mayor's Office announced the principal instruments of the ‘Marshall Plan’ aimed at alleviating the finances of these groups.
For a greater tax culture and the promotion of solidarity
This economic reactivation plan pursues the generation of tax incentives, promotes formalization and increases tax collection.
Regarding the tax incentives, the program will freeze the property tax for all properties in the city and provides payment facilities. Also, it looks forward to applying discounts for vulnerable households that experienced an increase in their property tax in previous years. Besides, it would grant a property tax exemption for theatres and museums during the next two years. Furthermore, it proposes discounts on the Industry and Commerce Tax for entrepreneurs who reported financial losses during 2020.
On the other hand, the Mayor's Office seeks the promotion of business and labour formalization by simplifying procedures and reducing costs. For this reason, the government wants to subsidize the commercial registration tariff, which is a requirement to legalize all business activity. Likewise, Bogotá´s Marshall Plan proposes tax discounts for entrepreneurs until 2027 and the creation of a corruption hotline in formalization procedures.
Finally, this strategy aims a higher tax collection among the prosperous sectors of the local economy. In this sense, it formulates an increase of the property tax for properties whose value exceeds USD 260,000. Moreover, the plan will increment taxes for platforms that act as online intermediaries in electronic sales.
The Social Contract
This strategy of economic reactivation and social welfare complies with the aims of Claudia López administration to create a new Social Contract for Bogotá. This objective is based on the construction of a system of care that articulates services for vulnerable communities, generates education and working opportunities for women and the youth, and fights against extreme poverty.
In general, with Bogotá´s ‘Marshall Plan’ the local government intends to generate greater household liquidity. Also, it encourages formalization to enable citizens to apply for social aids and line credits provided by the government. Finally, it has a redistributive approach in the sense that increases tax collection among wealthy Bogotanos to finance social care for the vulnerable.
In the coming weeks, the Mayor´s Office will submit this plan for the approval of the City’s Council.
