The National Federation of Merchants (Fenalco) said on April 30 that the recent partial suspension of the wealth tax by the Constitutional Court does not address what it describes as structural problems with the measure.
According to Fenalco, while some non-profit entities such as universities and buildings are temporarily excluded from paying the tax, companies with capital above 10.474.800 million pesos remain obligated to pay. The group also noted that public service providers outside winter emergency zones will still be subject to the tax, which could lead to higher rates for consumers.
Jaime Alberto Cabal Sanclemente, president of Fenalco, said: “The decision of the Court, although it introduces some relevant exclusions, does not correct the serious structural problems of a tax that we consider highly unconstitutional and harmful to the business fabric of the country.”
Cabal also said: “It is insisted that ‘the state of emergency is being used as an instrument to solve a structural problem of state financing.’ In a context where there are constant questions about public resource management, it is neither logical nor fair to shift this burden onto entrepreneurs in order to compensate for fiscal deficiencies in an administration perceived as increasingly careless, wasteful and facing serious allegations of corruption.”
He further argued: “Additionally, the wealth tax is confiscatory because it taxes a static manifestation of wealth without considering real results or liquidity for contributing companies. Applying rates between 0.50% and 1.6% on a non-liquid asset base can generate significant burdens for companies whose capital is invested in productive assets.”
Cabal concluded by calling on both Congress and future government officials “to adopt a clear commitment with a fiscal shield that protects investment, avoids confiscatory taxes and guarantees an environment where companies can operate with minimum conditions necessary for sustainability.”
