Case of the Rebate Tax or Flexible Certificate-Cert
39 Pages Posted: 20 Mar 2000
Colombia has politically struggled to launch a consistent and long-term export promotion policy. It has been a successful, not partisan and realist policy. Government initiatives have been oriented to mitigate market distortions introduced by fluctuating terms of trade of Colombian commodity prices in the international market. This paper explores suggestions made to the Colombian Government about the convenience of incorporating in the Colombian Legislation a new normative to stabilize export business activity, mainly preserving for the domestic producer long-term relative price stability. Also to encourage the export of services, activity that has not been regulated prior to the law issue. The paper proposed the establishment of an independently government activated tax rebate based on counter-cyclical price movements to stabilize exporters real income, affected by systemic prices and exchange rate fluctuations. Government officers and interest group institutions discussed the argument, before this political and economic architecture derived into the expedition of Ley Marco de Comercio Exterior. Framework Law 48 of 1.983, empowered the Executive to legislate in trade related matters, thus introducing a flexible mechanism to correct systemic market fluctuations in exporters? favor. Short-term consequence of this normative improvement was duplication of dollars exported value in less than a decade.
JEL Classification: F13
Suggested Citation: Suggested Citation