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Colombia: Santos Wants Tax Reduction

Colombia's likely next president favors reducing the corporate tax rate.

BY JOACHIM BAMRUD

CARTAGENA -- Juan Manuel Santos, the leading candidate in presidential elections in Colombia next month, wants to reduce corporate taxes in the country.

"We believe in a reduction," he told a group of attendees at the World Economic Forum Latin America in Cartagena today when asked by Latin Business Chronicle whether he would increase or reduce corporate taxes.

He said he is evaluating the cost of a reduction to ensure that the net result is positive. Among the benefits of a reduction is to lure more informal business into the formal economy, he said.

More than half -- 58 percent -- of Colombian jobs are in the informal sector,  according to Hernan Jose Gomez, president of the Private Council on Competitiveness and a former Colombian official.  

Santos also pledged that his goal was to achieve 5 to 6 percent annual GDP growth for Colombia. To achieve that, he would implement policies aimed at strengthening five key drivers of the economy: low-income housing, agriculture, infrastructure, innovation and mining/hydrocarbons.

"Colombia's infrastructure compared with similar countries is significantly unreliable," he said.

Most foreign investors single out the lack of inrastructure as the key challenge for doing business in Colombia.  And the need to improve that infrastructure will only grow as Colombia expands its international trade, pointed out Serafino Iacono, co-chairman and executive director of Pacific Rubiales Energy, the fastest-growing energy company in the South American country.

Santos said  a possible model to follow would be Brazil, where the government had implemented several public-private partnerships in infrastructure.

Meanwhile, the fast-growing mining and oil sector has the potential to grow even more, at rates of 11 to 12 percent per year, he said.

The agricultural sector needs to boost productivity and has strong potential as many countries worldwide face food shortages, according to Santos. While Colombia has plenty of fertile land, too much is under-utilized, he pointed out.

"The productivity of our economy is very low," he said.

Santos also plans to more than double the annual construction of low-income housing in Colombia to more than 300,000 units per year. That would benefit both the end-users as well as various sectors of the economy, he said.

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