July 12, 2018 / 6:22 PM / 2 months ago

Colombian business leaders press president-elect on tax cuts, labor reform

BOGOTA, July 12 (Reuters) - Colombia’s biggest trade, industry and banking associations called for tax cuts, lower labor costs and reforms of the country’s pension system on Thursday in a series of proposals to President-elect Ivan Duque to help bolster the sluggish economy.

The Guild Council of 21 associations presented the right-wing leader with a two part document laying out suggested economic priorities to be tackled by his administration.

The business leaders sought assurances from Duque that he would seek to increase production, maintain investment rates, combat a high fiscal imbalance, fulfill international commitments, fight corruption, respect private property and ease pressure on the local economy from Venezuela’s economic crisis.

They also unveiled ideas on taxation, how to reduce labor costs, promote labor formalization and flexible hiring schemes, while also reforming the pension system and land management.

“We invite the proposals developed in this document to be used as input for the construction of the next national development plan in such a way that they go beyond the electoral period and guarantee the transition to a more prosperous, inclusive and sustainable economy,” the report said.

Some of the ideas put forward in the report appeared squarely in line with those made by Duque himself on the campaign trail and seek to stimulate faster growth in Latin America’s fourth largest economy.

Duque, who replaces President Juan Manuel Santos on Aug. 7, has not yet announced any specific reform proposals or economic policy plans.

The outgoing government will present Duque with its own plan to reform the pension system but it is unclear whether he intends to act on it.

Still, the Guild Council called for a “comprehensive reform, with a long transition period, that respects the rights acquired by pensioners and the legitimate expectations of those who are next to retire.”

Among other ideas, the guild suggested reducing the corporate income tax rate to 28 percent from 33 percent, eliminating tax exemptions, getting rid of highly complex taxes and creating a centralized system of declaration and payment of territorial taxes.

The current government sees economic growth this year at 2.7 percent, up from 1.8 percent in 2017.

One of the biggest difficulties Duque faces is the limited wiggle room he has to adjust the nation’s fiscal accounts.

The government runs the risk of not meeting deficit targets, which could lead to a downgrade of its jealously-guarded credit ratings. (Reporting by Nelson Bocanegra and Carlos Vargas Writing by Helen Murphy; Editing by Tom Brown)

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