Security Exchange News

Anti-government protests erupt over tax reforms

10 May 2021

Tens of thousands of Colombians have been gathering in massive nationwide protests which enveloped the country since 28 April. Defying a 20:00 curfew and risking Covid-19 infection, the demonstrators have been gathering to protest a controversial tax reform bill passed by President Ivan Duque on 15 April. Across more than a week of protests, the demonstrators have burned buses and police stations, looted banks and shops and even blocked all of the main roads leading to Cali; the country’s third largest city. This has left Cali with dozens of empty grocery shops and a general shortage of medicine in the city. In an effort to curb the violence, President Duque deployed troops to the largest gatherings. At least 24 people have died, more than 800 civilians and officers have been injured and more than 400 have been arrested.

On 2 May, President Duque withdrew the controversial tax bill, but the civil unrest has continued. On 3 May, Alberto Carrasquilla, the country’s finance minister, resigned. Colombia’s deficit has tripled to nearly eight percent of GDP, and many of the country’s economists think the reform bill was actually necessary to tackle the deficit. The reform bill planned to remove several VAT exemptions and lower the thresholds for income tax, and Carrasquilla argued that the bill would have reduced the share of Colombians in extreme poverty by six percentage points. However, most of Colombia’s population did not see it that way and around 80 percent of them opposed the bill, according to a recent survey.

Colombians were clearly not only discontent with the tax bill. After suffering from the Covid-19 pandemic, 2.8m more Colombians fell into extreme poverty in 2020 and more than 500,000 businesses closed. Many of the demonstrators protested directly against President Duque, who promised to make the country safer and has failed to do so. Colombia is reportedly exporting record amounts of illegal drugs and FARC dissident groups have been proliferating across rural settlements. Since 2016, when the peace deal between the government and FARC was signed, dissident guerrillas have forced rural communities from their homes and incited conflict with Venezuelan troops in the border state of Apure. Moreover, Colombians blame President Duque for mishandling the Covid-19 pandemic and allowing the use of excessive force against the protesters.

On 4 May, President Duque moved to set up a dialogue between protesters, civil groups and the government, scheduled for 10 May. However, civilians’ demands have now expanded to withdrawing a health-reform bill, which introduced a guaranteed minimum income for coverage, making an agreement less likely. President Duque, unlike his predecessors, lacks a majority in Congress and will face an uphill battle as his political allies slowly distance themselves from him publicly. Now, a self-declared leftist socialist, Gustavo Petro, who lost to Duque in the 2018 elections, is gaining considerable momentum and could represent Colombia’s first socialist president if the trend were to continue. President Duque must battle on several fronts, by placating the population and his political colleagues whilst avoiding setting the country on a path to rising inflation and reaching the threshold of unsustainable debt.