Colombia rushes to plug $500 mln health budget gap

* Court throws out presidential healthcare funding decree

* Uribe faces battle with lawmakers to get taxes passed

* Court delivers second blow this year to Uribe’s agenda

By Hugh Bronstein

BOGOTA, April 18 (BestGrowthStock) – Colombia’s government will
rush a tax bill to Congress this week to fill a budget hole
that opened up when the Constitutional Court struck down a
presidential decree aimed at funding healthcare.

The court’s decision on Friday threw out Alvaro Uribe’s
February decree imposing a levy on alcoholic beverages,
cigarettes and gambling. Money raised by these taxes was to go
toward funding Colombia’s cash-strapped healthcare system.

But the court decided that Uribe’s emergency healthcare
reform — which would have provided $500 million through 2011
— was not justified as an executive order and that the measure
would have to be voted on by the legislature.

Recognizing the financial problems that Colombia’s health
system faces, the court delayed the effect of its decision
until mid-December. This will allow the decreed taxes to remain
in effect until then and give Congress time to pass a
healthcare funding package of its own.

“The government is ready to work arm-in-arm with Congress,”
Uribe said over the weekend.

But it will not be easy for him to get new taxes passed.

The president’s legislative clout is dwindling as he
prepares to step down in August at the end of his second term.
Voters will choose his successor in May’s presidential
election.

“Congress is distracted by the election and this is not a
good time to talk about raising taxes,” Santiago Castro, senior
ranking member on the lower House economic affairs committee
told Reuters. “It will be a difficult debate.”

Other aspects of Uribe’s decreed healthcare reform sparked
protests from critics who said the plan would reduce services,
especially to poorer sectors.

Earlier this year, the Constitutional Court struck down a
plan to hold a referendum intended to enable Uribe, a Wall
Street favorite popular for his U.S.-backed crackdown on
leftist guerrillas, to run for a third term.

MARATHON EFFORT

Health Minister Diego Palacio said he and other government
officials were working “as if in a marathon” to draw up tax
legislation to be submitted to Congress on Monday or Tuesday.

“The finance ministry, health ministry and the president’s
legal staff will prepare the necessary bill,” Palacio told
reporters. “It will be marked ‘urgent.'”

Finance Minister Oscar Ivan Zuluaga had predicted that an
adverse court ruling would put government finances “in a
difficult situation.”

Over the weekend he said gamblers, smokers and drinkers
would be asked to foot the bill for the increase in health
insurance funding under the planned legislation.

Colombia expects economic growth of 2.5 percent this year
as Latin America’s No. 4 oil producer climbs back from the
global doldrums of 2009. The government’s high deficits are a
key impediment to Colombia regaining its investment grade
credit rating.

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(Editing by Andrew Cawthorne and Maureen Bavdek)

Colombia rushes to plug $500 mln health budget gap