Petro’s Gamble: A Taxing Tale of Decrees and Disarray

by

In the fair land of Colombia, where the sun doth shine upon the travails of governance, President Gustavo Petro hath found himself in a most precarious predicament. The Constitutional Court, with a sternness that might rival Lady Catherine de Bourgh, hath declared his economic emergency decree most unconstitutional, thus thwarting his ambitious plan to impose a value-added tax upon the realm’s online gambling sector. This ruling, delivered on the ninth of April, doth compel the government to seek congressional approval for any future gambling tax, a task as daunting as securing a proposal from Mr. Darcy himself.

Key Observations:

  • The Constitutional Court, with a wave of its judicial hand, hath blocked Petro’s $3.1 billion emergency tax decree on April 9.
  • Fecoljuegos, the guardian of gambling entrepreneurs, reported a 30% decline in online gross gaming revenue after the 19% VAT was introduced in February 2025, a misfortune as great as a rejected marriage proposal.
  • Decree 0240, in a move as bold as a heroine declaring her independence, named crypto deposits as taxable for the first time under Colombian law.

Thirteen Months of Decrees Meet Their Waterloo

The court, with a wisdom that might be likened to Mrs. Bennet’s matchmaking fervor, ruled that Decree 1390, signed by Petro’s full cabinet last December, exceeded the president’s constitutional powers. Magistrate Carlos Camargo Assís, the author of the lead opinion, proclaimed the move an “affront to the operation of Congress,” arising from “political conflicts due to the refusal of legislative initiatives of the government.” One might say, a drama as tangled as the relationships in Mansfield Park.

This ruling doth prevent Petro from collecting approximately $3.1 billion (12 trillion Colombian pesos) through emergency fiscal measures, including the 19% VAT on online gambling gross gaming revenue (GGR), increased VAT on alcoholic beverages (from 5% to 19%), a 50% income tax surcharge on financial institutions, 19% VAT on luxury items (such as yachts and high-powered motorcycles), and revised wealth assessments. A financial setback as significant as the Dashwood sisters losing their fortune.

The saga began last February, when Petro’s administration first introduced a 19% VAT on online gambling deposits as a temporary emergency measure to fund the response to civil disturbances in the Catatumbo region. Fecoljuegos reported that the tax caused a 30% drop in online gross gaming revenue within months, with some platforms seeing declines of nearly 50% across deposits and player activity. Monthly transfers from the gambling sector to Colombia’s healthcare system (which receives gambling revenue by law) fell from $9 million (40 billion pesos) to $6.1 million (27 billion pesos) per month, a reduction as drastic as Mr. Collins’s chances with Elizabeth Bennet.

When Petro sought to make the tax permanent, the Senate’s Fourth Economic Committee rejected his financing law by a 9-4 vote in December. Rather than accept this defeat with the grace of a true gentleman, Petro invoked emergency powers and signed Decree 1390 before Congress went into recess. The decree reimposed the 19% VAT, this time calculated on gross gaming revenue rather than deposits – a shift that Fecoljuegos acknowledged as recognizing “the true math of the business,” while maintaining the tax remained as unsustainable as a marriage of convenience.

The Constitutional Court intervened on January 29, provisionally suspending the decree by a 6-2 vote in what legal experts described as an unprecedented move in Colombian constitutional history. Juan Camilo Carrasco, managing partner of Bogotá-based gaming law firm Sora Lawyers, told iGB.com that the court “rarely adopts preventive measures of this type,” suggesting the decree faced serious obstacles, much like a heroine navigating the complexities of society.

Undeterred, the government launched a third attempt in March, issuing Decree 0240 in response to severe flooding in northern Colombia. This time the mechanism was a 16% consumption tax on digital gambling platforms rather than a VAT, with the taxable event defined as deposits made via “cash, money transfers, or cryptocurrencies” from within or outside Colombian territory. The decree explicitly brought crypto-funded gambling activity within the scope of taxation for the first time under Colombian law, a move as innovative as a heroine penning her own novel.

The court’s final annulment of the original emergency decree at the end of March, followed by the April 9 ruling declaring it unconstitutional, has now closed the executive-action pathway. Combined with the earlier budget shortfall from the Senate’s rejection of the financing law, the total unfunded gap in Petro’s 2026 budget exceeds 16 trillion pesos. The government must now pursue spending cuts of approximately 2.5% of GDP or pass new legislation through Congress, a task as challenging as securing a second proposal from Mr. Darcy.

Colombian equity markets, however, responded positively. The COLCAP index rallied following the ruling, with investors interpreting the court’s independence as a signal that Colombia’s institutional framework remains functional regardless of executive overreach. Legal experts consider new gambling tax legislation unlikely before the presidential election, with Petro’s prospects as uncertain as a heroine’s marital fate ahead of the May 31 vote. Carrasco of Sora Lawyers assessed that new proposals would likely be deferred “to a normal legislative process at a later date, after the 2026 elections,” a delay as protracted as a novel’s happy ending.

Petro’s administration has reshuffled the cabinet 15 times since taking office in 2022, contributing to the procedural irregularities that undermined the decree’s legitimacy. For Colombia’s licensed operators, the ruling provides short-term relief but leaves the long-term tax framework unresolved until a new government takes office in 2027, a situation as uncertain as the weather in Pride and Prejudice.

Read More

2026-04-14 13:57