Taxes: strong tax competition for registrations - Sectors

The discussion is not new, but it is still in the air. On the one hand, while some car owners, tired of the restrictions and the bad condition of the roads, Threaten to move license plates to other citieson the other, municipalities and departments they seek to attract new taxpayers with deep tax discounts.

This totally legal strategy has meant a bonanza for small towns in the last two years due to new car registrations, which, of course, has also been affected by the drop in vehicle and motorcycle sales.

The important thing about this competition between municipalities and capital cities, and even between departments, is that has a clear winner in the first place: the owner of the carand secondly, small populations that are left with the collection, but without the burden of managing traffic, the use of road infrastructure and the accident rate, this to the detriment of capitals such as Bogotá.

Since last year, the Cundinamarca Treasury Department has offered those who purchase a new vehicle and register it at any of the department’s transit agencies a 50 percent discount on the tax the following year and 20 percent in the second year. . For hybrid vehicles the ‘rebate’ is 40 percent in motor vehicle tax for the next five years.

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According to data from the Single National Traffic Registry, Runt, In the first quarter of this year, while in Bogotá 8,663 vehicles were registered, in Cundinamarca there were 11,059.

There is even a phenomenon that is replicated in other regions of the country. Bogota, which has close to eight million inhabitants, currently has 2,143,134 registered vehicles (not including motorcycles), while the neighboring municipality of Cota, with less than 30,000 inhabitants, has 236,473 on its records.

Municipalities like Rivera, in Huila; Soacha and Funza, in Cundinamarca; Florida Valley; Girón, Santander, and Acacías, Meta, among others, have more registered motorcycles than inhabitants (see infographic). There are other populations such as Guacarí, Valle del Cauca and Funza, Cundinamarca, which mainly attract public service vehicle license plates (white plates).

in the capital, Thanks to Agreement 780 of the Bogotá Council, in 2021 some tax incentives were created specifically for new electric or hybrid vehicles, which have since last year, and until 2030, annual tax discounts ranging between 40 percent (electric private individuals) and 70 percent (electric taxis) for five years.

(Also read: ‘The energy transition is in intensive care,’ companies tell Petro).

A phenomenon is presented that is replicated in other regions of the country

Photo:

Vanexa Romero. TIME

Competition for registration fees and taxation transcends departmental borders. One of the most curious cases occurs in Villa del Rosario and Los Patios, Norte de Santander. It is not a novelty, but it is striking that expensive sports cars carry license plates from these municipalities.

A report from the Fenalco branch, based on Runt records, showed that every 10 vehicles registered in the metropolitan area of Cúcuta, six were sold outside the department.

Those vehicles registered in Cúcuta, Villa del Rosario and Los Patios were sold in Bogotá, Medellín, Cali, Bucaramanga and Barranquilla. In these towns in Norte de Santander, tuition costs and taxes are lower, savings can be between 40 and 65 percent.

(Also: One of the best-selling cars in Colombia says goodbye: these are some alternatives).

In December of last year, Villa del Rosario ranked eighth among the ten cities with the most registered vehicles (740 units), which represented an increase of 59.5 percent compared to December 2021.

That year, moreover, The Secretary of Finance of Norte de Santander launched an ambitious plan to recover income from vehicles registered in other departments, but that roll through that region.

Transferring the registration to cities such as Cúcuta, Los Patios, Villa del Rosario, Pamplona, Ocaña, among others, represented their owners with a 50 percent discount on the tax for the following three years, plus 20 percent for I’ll pay soon . A bargain for the owner of a Ferrari or a Twingo.

Is it legit?

Although these discounts have become a headache and a broken vein in tax collection for some cities, the truth is that there is no prohibition to grant tax benefits, nor is the obligation that the vehicle must register where it is filming.

The plates are an element of identity of a vehicle and authorize its transit anywhere, since they are a national document, like the citizenship card. And as we mentioned at the beginning, more than taxation, the real problem with this phenomenon is that the vehicle pollutes, uses infrastructure and creates mobility and congestion problems.

(You can read: What does Ocampo think of Irene Vélez’s proposal to change the formula to the price of gasoline?).

Each territorial entity enjoys autonomy to adopt the fiscal policy that best suits it.

Although the vehicle tax is set each year by the Ministry of Transportation, each territorial entity enjoys autonomy to adopt the fiscal policy that best suits to the objectives outlined in its development plan, which means that the incentives granted are within the legal framework that the Constitution recognizes for municipalities and departments.

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