If the initiative submitted by the government of President Gustavo Petro for consideration in the House of Representatives last Wednesday is approved, Owners of municipalities whose cadastre is not up to date The limit of increase in property tax between 50 and 300 percent compared to the previous year’s payment is determined depending on the value of the property and regardless of whether it is in an urban or rural area.
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While the project has sparked controversy, with sectors such as trade and construction raising the possibility of dealing an additional blow to the current economic slowdown, the Government has stated that this will not affect all properties and will be a relief for tax payers.
The impact will be felt on properties or buildings that do not: They have been cadastrally updated for years. Almost 90 percent of the country is in this situation, because today the cadastral update with the multi-purpose approach is just over 9.6 percent.
Capital cities such as Bogotá, Medellín, Cali, Barranquilla, Bucaramanga, Pereira and Ibagué have already been cadastrally updated, so this project will not affect them, except in exceptional cases.
The Colombian Chamber of Construction (Camacol) pointed out that increases in the costs associated with home ownership and, more importantly, social housing deter household investment.
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In the face of criticism, Finance Minister Ricardo Bonilla assured that the project constitutes reliefBecause under current conditions, if someone’s cadastral value is increased by 1000 percent, the property tax may increase up to 1000 percent.” With the project, “necessary facilities will be created, the most clear evaluations will be made and all municipal councils and mayoralties will be able to organize the payment of property taxes upon entry into force. is managed.”
The project, presented by Ministers of Agriculture and Rural Development Bonilla and Jhenifer Mojica Flórez, shows that for the lowest value properties (135 minimum wage, about 156.6 million pesos at this year’s prices) the increase limit will be 50 percent.
Rural properties with similar cadastral valuations for residential, commercial or infrastructure support will also have the same limit; agricultural, corporate production and conservation and conservation areas.
The payment will come into force in the year following the year of the cadastral update.The project states that if citizens do not participate in the evaluations, the burden of proof will fall on the public administration.
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The increase will be up to 100 percent of this year’s tax in 2023 for properties valued between 135 and 250 above the current monthly minimum wage (up to 296 million pesos).
For properties with minimum wages between 250 and 350 (406 million pesos), the increase can reach 150 percent of the value of the existing property. The tax increase will reach 200 percent for properties and will be between 350 and 500 percent of the current legal minimum wage (up to 580 million pesos).
In 2023, the increase will be up to 300 percent for non-updated properties whose value exceeds the 500 minimum wage.
Regarding these restrictions, Minister Bonilla said: “This gives city councils and mayors peace of mind and transparency so that they are not pressured into paying for property even if cadastral assessments have been updated.”
The government’s project leaves municipal governments with the opportunity to create payment facilities for taxpayers under new regulations that must in any case be passed by the Republican Congress. The government recognizes that local adoption must be discussed and approved by city councils.
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The initiative consists of four articles and 7 paragraphs that determine how the regulation in question will be made. and specifies the conditions under which they will not apply.
In this sense, it warns that this limitation will not apply to immovable properties that are included in the cadastral basis for the first time, undeveloped and unbuilt zonable parcels, or rural properties with subdivision license that are not developed and have no agricultural use.
Among the motivations that pushed the government to make this change in the property tax is that the tax in question should be implemented “in accordance with the principles of equity, efficiency, progressiveness and retroactive taxation” included in the Constitution. The state will have to carry out a new cadastral assessment, which will be the basis for the implementation of these adjustments, to the extent that it is necessary to know the economic reality of the property.
According to the government, properties currently do not reflect this economic realityThis makes it impossible to know whether a fair and equitable tax was paid or collected as required by the country’s political charter, as it may have worn out or gained value over time.
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“If the state updates the cadastral valuation after more than five years, there will be a significant impact on taxpayers’ ability to pay,” the government warns in a statement explaining the reasons for advancing the discussion of its proposal.
The initiative also aims to eliminate the exceptions contained in Law No. 1995 of 2019; these include “properties arising from construction or building that appear as unbuilt and built lands and on which the new assessment is made” for which the cadastral update was made. The specification will include those changes that will allow it to be classified in any of the new ranges provided in the standard.
Another exception that will lose its validity with this initiative will be valid for properties whose economic target has changed. or those with registered changes in land and/or construction areas, because, as the Government has stated, there is a very significant volume of changes in the economic objective in the country.
Executive calculations show that, although municipal and total revenue as a result of the IPU in Colombia is higher than in other Latin American economies, it is lower than the average for OECD countries (1.1 percent).
Jaime Alberto Cabal, president of the National Federation of Merchants (Fenalco), said: This initiative “impacts the right to decent housing by overstretching the desire to have one’s own roof.”. In addition, segments such as retirees who live on subsistence income and families who live in their own properties and do not generate income will have to sell their properties because they will not be able to pay the exponentially increasing property tax.
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Faced with these positions, the Minister of Finance said, “The project is not to increase the property tax, the Government does not have the authority to increase the property tax, that is, the municipal councils have the authority. “We provide relief to ensure that the update of the cadastre does not immediately and directly affect citizens’ property taxes.”
Meanwhile, according to Camacol, the possible effects of real estate regulations add to other factors: “Inflation, high interest rates and changes in housing policy were factors that affected the declines in sales, and as a result, resignations increased rapidly, mainly affecting lower incomes.” -income households.”
Source: Exame