Just run the executive branch, Mr. President
As in many sports, governments dedicate their energies not only to scoring goals, but to stopping opponents’ attacks.Until May, when President Iván Duque at last began building a congressional coalition, his administration had not followed this principle. Duque lacked a working coalition to help pass his administration’s proposals for tax, justice or anti-corruption reforms, or to advance a national development plan.
Now the opposition has partnered with several powerful undecided parties, to form a coalition to promote its own legislative reforms. Though they claim it’s all about defending peace, it’s clear that it’s about wielding power: these politicians aim to show the government that it doesn’t control Congress, can’t set a legislative agenda and, in the end, doesn’t really govern Colombia at all. Indeed, Polo, the Greens, the FARC and Decentes, in alliance with Cambio Radical, the Liberals and La U, may now have a congressional majority. Do all these kindergarten fights have real consequences? Yes and no. Yes, because the resignation of the Attorney General and the Minister of Justice, in Duque’s losing challenge to a facet of the FARC peace deal, weakens the rule of law and the quality of institutions. No, because pension reform isn’t indispensable in the short run. Duque would do better to just focus on managing the executive branch; obstructive congressional machinations may ultimately do him a favor. That is, if he does a better job of managing the executive branch than of managing his proposals in Congress. And that remains to be seen.
Whenever proposals to raise income taxes come up, members of Congress usually retort that instead of squeezing hardworking Colombians (read: voters), one should look into taxing lenders, and the financial sector. Usually these ideas go nowhere. But Senator David Barguil, a longtime antagonist of banks, convinced Congress to vote in an income tax surcharge on the financial sector last year. Even if it will be struck down by the Constitutional Court, which is likely, Barguil can emerge a winner, by telling his constituency that he did his best. Now Barguil is charging again, pushing a bill that would force banks to eliminate monthly service fees on savings, checking and credit card accounts, and forbidding charges for various other services. Another bill, proposed by Centro Democrático itself, and also aimed at curbing banks’ fees, is moving even faster through Congress. Banks are very concerned about the effects such measures could have on their profitability; a worry magnified by the government’s evidently reduced ability to shield them. Indeed, it seems “the times they are a-changing.”
Aside from this one battle in Congress, there is another one coming up, related with the General Royalties System (SGR). The Santos administration reformed the previous royalties system and created the SGR in 2012. It was a long and complicated reform because it entailed taking away resources form the producing territorial entities (ETs) and, also, because part of it implied a reform to the Constitution, which is always a long and difficult ordeal. Even though it has had positive effects on the distribution and use of royalties, the current Government gauged that it was necessary to introduce further reforms to the SGR, while maintaining the “spirit” of the 2012 reform. The main changes that the reform may bring along are an increase in the amount of royalties received by the producing ETs, less restriction and more efficiency in the process of approving investment projects and lastly, to change the way royalties are distributed by creating two categories: territorial and regional. We think that we are still very far away from having a reform, since the constitutional first step has still six hard rounds to go through in Congress. Also, we agree with the concept of certain aspects of the reform but, also, we think that, in pursuing greater dynamism in the execution of royalties to foster growth and realize also political gains, the national government is going too far. This could backfire in the near future.
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