The Minister of Finance of Colombia, Germán Ávila, announced that the national executive is evaluating making substantial modifications to the tax on games of chance and luck, as part of the economic strategies implemented to respond to the climate crisis the country is going through. This measure seeks to accelerate the collection of funds destined to assist populations affected by the floods in the department of Córdoba.
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The official’s statement was made during a session of the Council of Ministers in Colombia, where additional fiscal alternatives to the previously announced corporate wealth tax were discussed. According to Ávila, the adjustment to the tax on games of chance is part of a package of complementary measures designed to increase state revenues in emergency situations.
The minister emphasized that this initiative represents an immediate response to the urgent need for economic resources to assist the victims. The proposal arises at a critical moment when the national government must balance social demands with the budgetary constraints the country faces.
Background of the tax proposal on games of chance
Minister Ávila explained that the initiative contemplates modifying the sector’s tax structure, an alternative that had already been considered during previous emergencies. This proposal is added to the set of economic actions adopted by the government to obtain the necessary financial resources to assist communities affected by intense rainfall.
The possible tax reform on gambling comes in a context of fiscal tension, after the National Congress rejected the tax reform presented by President Gustavo Petro’s administration in early December. That initiative sought to raise approximately 3.88 billion dollars to complete the national budget for 2026.
The legislative rejection of the tax reform forced the executive to explore alternative financing mechanisms, which led to the declaration of an economic and social emergency. This situation has generated an intense debate about the limits of executive power and the government’s constitutional attributions in fiscal matters.
The proposed modification for the games of chance sector could involve changes in tax rates, the taxable base, or collection mechanisms. Although the minister did not specify the details of the reform, he indicated that it is a comprehensive restructuring of the tax system applicable to this industry.
Suspension of the economic emergency decree by the Constitutional Court
Two weeks before Minister Ávila’s announcement, the Constitutional Court of Colombia had decided to provisionally suspend the economic and social emergency decree while it conducts a thorough study of its constitutionality. This decision represents a significant obstacle to the government’s fiscal plans.
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Decree 1390, issued by President Petro, granted the executive the power to issue decrees with the force of law for a period of 30 days, including the possibility of creating new taxes according to the fiscal needs of the moment. This constitutional tool, used in exceptional circumstances, allowed the government to act without prior congressional approval.
The provisional suspension ordered by the constitutional court generates uncertainty about the viability of the tax measures the government planned to implement. The magistrates considered it necessary to conduct a detailed analysis before allowing the executive to exercise extraordinary legislative powers in economic matters.
This judicial decision reflects the system of checks and balances that characterizes the Colombian constitutional regime, where the judiciary can review the executive’s actions to ensure they comply with the current legal and constitutional framework.
Prospects for the games of chance and luck sector
The games of chance and luck sector in Colombia is at a crossroads. On the one hand, it represents a potential source of significant tax revenue that the government urgently needs. On the other hand, companies in the sector require regulatory and tax stability to plan their long-term operations.
The eventual modification of the tax could include different scenarios: an increase in current rates, changes in the calculation base, new specific taxes, or a combination of these alternatives. Each option would have different implications for operators and for the expected tax collection.
Tax experts recommend that any reform in this sector consider international best practices, avoid double taxation, and maintain the competitiveness of the Colombian market compared to other countries in the region. Furthermore, they suggest implementing more effective oversight mechanisms before increasing tax rates.
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