Colombia's president withdraws tax reform after protests

FILE PHOTO: Demonstrators take part in a protest against the tax reform of President Ivan Duque's government in Bogota, Colombia, May 1, 2021. REUTERS/Luisa Gonzalez/

BOGOTA (Reuters) -Colombian President Ivan Duque said on Sunday he would withdraw a proposed tax reform after sometimes violent protests and widespread lawmaker opposition, though he insisted a reform is still necessary to ensure fiscal stability.

Duque said on Friday the law would be revised to remove some of its most controversial points - including the leveling of sales tax on utilities and some food - but the government had previously insisted it could not be withdrawn.

Protests against the reform have led to multiple deaths around the country since they began on Wednesday.

"I am asking Congress to withdraw the law proposed by the finance ministry and urgently process a new law that is the fruit of consensus, in order to avoid financial uncertainty," Duque said in a video.

The reform, which the government has insisted is vital to stabilizing Colombia's finances, maintaining its credit rating and funding social programs, remains necessary, Duque said.

Political parties, local officials, business leaders and civil society have contributed valuable ideas over the last several days, he said.

There is consensus on the need for temporary taxes on businesses and dividends, an increase in income tax for the wealthiest and deepened state austerity measures, Duque said.

"It is a moment for all of us to work together without malice," he said.

The central bank warned on Friday failure to approve the reform could have a negative impact on the economy, while a loss of the country's investment-grade credit rating has already been priced in by many investors.

Lawmakers, unions and other groups hailed the announcement as a victory. Celebratory cacerolazos, a traditional protest where people beat pots and pans, could be heard in some neighborhoods.

"It is the youth, social organizations and mobilized citizens who have seen deaths and defeated the government," leftist Senator Ivan Cepeda said on Twitter. "May the government not present the same reform with make-up. The citizens won't accept tricks."

There is not yet a definite national count of deaths connected to protests, amid incidents of looting, destruction of public transport and road blockades in several cities.

Local officials in Cali, the country's third-largest city and where demonstrations have been the most violent, have confirmed three. Another death occurred in Neiva and a police officer was killed in Soacha.

Human rights groups have alleged police abuses - especially in Cali - and said deaths number more than 20.

Duque said late on Saturday cities at high risk for disturbances would get military assistance, an offer rejected by Bogota Mayor Claudia Lopez.

(Reporting by Julia Symmes Cobb; Editing by Lisa Shumaker)

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