Colombia’s New President Debuts New Tax Reform, Aims to Reduce Gambling Taxes

new president, Gustavo Petro Urrego is submitting a proposal to reduce certain gambling taxes. He wants to raise taxes on the ultra-wealthy while cutting tax obligations on occasional gambling winnings.

Gustavo Petro Urrego, Colombia s new president, waves to the crows after casting his vote in the recent elections. The new leader wants to make sweeping tax changes, including a reduction in tax requirements for certain gambling earnings. (Image: Getty Images)

Petro, a former economist, was sworn in as Colombia s president on August 7 and has already deputed his new tax reform policy.

His reform proposes an income tax increase for wealthy Colombians. Under the policy, a 0.5% tax would apply to anyone whose net worth is above COP3 billion (US$695,000). Above COP5 billion (US$1.15 million), the rate is 1%.

The country s Congress now has the tax reform bill, developed in conjunction with inbound Minister of Finance José Antonio Ocampo. It s one of the first initiatives it received under Petro s leadership. As such, any decision could be a statement of support – or rejection – of his authority.

Petro ran for president in 2018, but this year ran on a platform of economic reform. He promised to add around $50 billion to the government over the next four years. The money, he stated, would finance social programs against poverty and inequality in Colombia.

Cutting Taxes on Winnings

Petro s proposal cust the tax rate on dog and horse race betting winnings, as well as income from lotteries and certain forms of gambling. Currently, winners give up 20% to the government through taxes.

According to the proposal, these are unjustified taxes, and Congress should approve their elimination. Additionally, Petro suggests eliminating a tax on profits from the sale of shares listed on the Colombian Stock Exchange. This comes with a caveat, though: the savings would not apply if the gains are more than 10%.

Petro has also promised to combat , which costs the country around $11.5 million annually. His tax proposal will eliminate some exemptions for companies while increasing taxes on coal, gold, and oil exports.

He s also proposed a new healthy tax that will increase the price of soft drinks and other sugary drinks, ultra-processed foods, and single-use plastic.

Colombian Gaming on the Rise

Earlier this month, the government reported that the total collection from licenses for games of chance registered year-on-year growth of 14% in the first half of the year. This amounted to COP384 billion (US$89.3 million), a 7% improvement over the gaming regulator s expected results for the period.

Land-based gambling was worth COP151 billion (US$35.1 million), or 42% of the total. iGaming accounted for COP113 million (US$26,272), 30% of the total and a year-on-year increase of 32%.

Petro s proposal didn t quantify the proposed tax cuts on gambling would take away part of that revenue. However, offsetting the loss would be the income tax increases.

Colombia s Congress has not yet responded to the initiative. But finding approval will face certain challenges. During his term, Ivan Duque, Petro s predecessor, twice tried to introduce tax reforms that included higher tax rates.

On both occasions, the results were massive anti-government protests across the country. Certain taxes, such as the health tax, are already concerned about disproportionately targeting lower-income segments. As a result, Petro and Congress may not be on the same page.