Colombia’s constitutional court docket overturned on Wednesday a tax reform legislation that got here into power this yr, probably affecting funding and forcing the federal government to unexpectedly discover hundreds of thousands in assets with the intention to meet its fiscal objectives.

The court docket dominated in a 6-Three vote that the legislation would stay legitimate solely via the top of 2019, obliging proper wing President Ivan Duque’s authorities to hunt to move a brand new legislation. It mentioned the legislation was not correctly printed within the legislative gazette between votes within the decrease and higher homes, violating regular process.

The choice was the most recent in a sequence of complications for Duque, whose financial tasks have confronted sturdy opposition from lawmakers, complicating his efforts to scale back debt, enhance development and keep away from a possible downgrade in credit score rankings.

The legislation included elevated earnings tax on excessive earners, a discount in enterprise duties and an extra tax on banks’ earnings. The weather of the previous legislation that had been overturned or modified will come again into impact if lawmakers don’t move another proposal by Dec. 31, the court docket dominated.

The federal government has not provided a calculation of the fiscal influence of the court docket’s determination. It’s concentrating on a deficit of two.2% of gross home product subsequent yr, down from 2.4% this yr.

Finance Minister Alberto Carrasquilla warned just lately {that a} determination to overturn the legislation may have an effect on investor confidence and produce decrease development for Colombia’s $350 billion economic system. “If it is not upheld, no one will believe again. The effect is permanent and in present circumstances is worth about a point and a half of GDP growth each year,” Carrasquilla mentioned.

The pinnacle of the tax company mentioned the federal government would suggest a brand new legislation to maintain advantages for companies and lift the assets required for the funds if the reform was overturned.

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