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War tax Original Source Link: (May no longer be active)
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020813/ap_wo_en_po/colombia_war_tax_1http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020813/ap_wo_en_po/colombia_war_tax_1
Colombia's private sector supports new president's war tax
Mon Aug 12, 8:48 PM ET
By DAN MOLINSKI
BOGOTA, Colombia - Despite a sluggish economy, Colombia's private sector is willing to pay a new tax aimed at beefing up the country's military to allow the government to crack down on rebels.
But the one-time, 1.2 percent tax on net assets of wealthy individuals and companies needs to bring results, and the money collected should be spent in a transparent manner, business leaders told Dow Jones Newswires on Monday.
Some business executives also said the tax should be discounted from future tax obligations.
"It will be a huge effort for the private sector, which is already lacking resources, but this tax will be worth it," said Luis Carlo Villegas, head of the National Association of Industrialists, or ANDI.
President Alvaro Uribe declared a state of commotion early Monday that expands government powers, allowing it to impose the new 1.2 percent tax. It would apply to people and corporations with net assets of at least 150 million pesos, or dlrs 57,000.
A top official from Colombia's No. 2 supermarket chain, Carulla Vivero, said his company recognizes the government's reason for imposing the tax.
"We're all aware that we have to make a general sacrifice," said the official, who asked not to be identified. "We can no longer finance this war with the same amount of resources we've been using before."
President Alvaro Uribe's new administration has already announced plans for a broader tax reform that would close loopholes and reduce evasion.
While specifics of how the tax would be applied to net assets have not been announced, Carulla would theoretically have to pay about dlrs 1.4 million, given that its net assets at the end of the first half were dlrs 117 million.
Meanwhile, Colombia's largest publicly traded company, brewer Bavaria, would be required to contribute dlrs 16.5 million on its net assets of dlrs 1.37 billion.
Officials from Bavaria were not available for comment. But the beer company's president, Ricardo Obregon, has previously said the private sector needs to support the government in its fight against the rebels.
ANDI's Villegas called the 1.2 percent tax a "huge undertaking" compared with a similar plan in 1992, when the government forced individuals and companies to buy "peace bonds" when their net assets were above a determined threshold.
"This tax is double (the 1992 peace bonds), which cost just 0.6 percent of net assets," Villegas said.
He said the industrial sector will demand that the government collect the tax in a transparent, efficient manner.
"We will work with the government to form a group to oversee the plan," Villegas said.
The taxes will be collected in three or four quotas during the next several months, a finance ministry spokesman said.
Extra funds from the tax will be used immediately to increase the size of the army and police force, said Defense Minister Martha Lucia Ramirez. About 10,000 more police officers will be recruited and two army brigades of 3,000 soldiers each will be added, she said.
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