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Colombia abandons plan to tax gold exports

José Antonio Ocampo finance minister of Colombia. (Image courtesy of Inter-American Dialogue | Flickr.)

Colombian finance minister José Antonio Ocampo said the government has withdrawn a plan to introduce a 10% duty on gold exports included in the tax reform bill submitted by the new leftist government of President Gustavo Petro in early August.

The proposal sought a 10% tax on the value of gold exports whenever the metal price exceeded $400 per ounce.

The benefits of such plan would have been difficult to measure as illegal miners continue to smuggle the precious metal out the country, Petro said in an event organized by ANIF Centre of Economic Studies.

The gold sector had also argued that such a tax would boost illicit export and reduce investment in the industry while adding a barrier to efforts to formalise small-scale and unofficial miners.

Various large companies work with small gold producers and the government is interested in promoting small-scale production and the popular economy, Petro said.

Another proposal which seeks to end the ability to deduct royalty payments on gold production from income taxes remains in the bill.

“Proposed export taxes on coal and oil will remain in the bill as the administration of new president Gustavo Petro seeks a greater contribution from the natural resources sector to finance the public sector and his plans to create a more equitable country,” the minister said in a statement.

The government is seeking a 10% tax on exports of coal and oil on income earned when each commodity exceeds a certain price. That threshold is set at $87 per tonne of coal and $48 per barrel of oil.

Petro’s proposed legislation could raise $5.8 billion in 2023 (1.72% of the country’s GDP) by also introducing a wealth tax, which would affect about 2% of the population.

The government has promised to use the additional income to fund anti-poverty efforts, free public university and other social welfare programs.