New taxes on Colombians targeted by Bloomberg

The new taxes on the first day of President Gustavo Petro's administration are being targeted by Bloomberg wealthy Colombians and energy exports.

The incoming leftist government, which took office on Sunday, said it was trying to reduce inequality and raise money for poverty-fighting programs.

The bill sent to Congress on Monday proposes a per-share income tax of 0.5% on assets of more than 2.7 billion pes $630,000, rising to 1% on fortunes over 4.6 billion pesos.

It would introduce a 10% export tax on oil, coal and gold when their prices are above an international reference price.

People earning more than 10 million pesos $2,300 per month would pay higher taxes on their salaries, while those earning less would be unaffected, according to the government. The dividend tax increases to 20%, from 10% for investors overseas who own shares in Colombian companies.

The bill aims to increase the scope of an existing carbon tax, as well as introduce new levies on sugary drinks, ultra-processed foods and single-use plastics.

The tax bill is a key test of the strength of the new government in Congress after Petro forged alliances with several parties in Congress to form a ruling coalition. The measures are likely to be changed by lawmakers in debates over the coming weeks.

The law hopes to boost tax revenue by 1.7% of gross domestic product by the year 2023. Petro had called for tax increases equivalent to about 5% of GDP during the campaign, so the first tax hikes are relatively modest in scope.

Incoming Finance Minister Jose Antonio Ocampo said the adjustment was clearly incomplete and that it is still not clear how much extra revenue will be used to cut the deficit, said Ana Vera, chief economist at Panama-based IN ON Capital. The health taxes on sodas and processed foods could put pressure on consumer prices, she said. Since 1999, the annual inflation has accelerated to its fastest pace.

Read more: Colombian inflation jumps more than forecast to 23 year highs.

Petro took office with debt near record levels, making it difficult for him to meet promises of more education and welfare spending while keeping the deficit under control.

Colombian tax revenue is the lowest among members of the Organisation for Economic Co-operation and Development after Mexico, and is about 19% of GDP. The nation lost its investment grade credit rating last year.

Stagflation doesn't put stamp on Earnings of US Consumer Giants.