Most Popular White Papers
Content provided in partnership with
Business Services Industry
Colombia - economic aspects of the country's land use
American Journal of Economics and Sociology, The, Dec, 2000 by Fernanda Furtado
As for the ambiguities that are frequently associated with customary weakness in the application of such instruments in Latin American countries, [4] this first period witnessed the development in Colombia of a practice for overcoming such ambiguities as were recognized as being at least partially inherent in the letter of the law. The strong need to apply the instrument guided the practice of adjusting the interpretation of legal precepts to facilitate its use. For instance, the instrument, although legally defined as a tax (i.e., technically irrespective of public services), was implemented as a charge--a practice that was, in fact, more in keeping with its moral justification.
B. Expansion and Consolidation
As a consequence of the adaptations just summarized, the use of the instrument entered into its second phase. This began in 1943 with the enactment of Law 1 of that year, which established a new role for the levy by stating important criteria and procedures that favored the expansion of its use by local governments. The key feature of this legislation was that it authorized the municipalities to exercise considerable freedom in the various steps involved in putting the instrument into practice. These steps, ranging from the types of projects to be financed by the levy to the management of resources collected, were to be locally defined by the municipal councils.
This local autonomy contributed to the consolidation of the levy by encouraging local political pacts respecting both the approval and the concrete implementation of local regulation. Besides, it led to the creation of local assessment agencies that were fundamental to the development of human resources and to the improvement of technical support necessary to the success of the various procedures involved in the collection of such levies.
The new legislation was not, in itself, framed in such a way as to preclude ambiguities in its interpretation; on the contrary, some of its precepts introduced further complications. For example, the law clearly abolished the previous limitation of the amount collected to the costs of the public investment, yet the connection of the levy with land value increments was loosely defined. This critical point with respect to the potential role of the instrument was also to be defined by each local government. Consequently, the levy acquired distinctive characteristics in each city.
The interpretation of the law in the city of Medellin, which by its intensive use of the instrument over the decades became a model for the other Colombian cities, well illustrates the wide range of possibilities. There, a series of regulations over the years, consolidated in the Municipal Fiscal Code in 1962, established two different levies to be used in two distinct situations: the first, the Contribucion de Valorizacion, a charge for financing works undertaken by the municipal government, and limited to the costs of the public work plus administrative costs; the second, the Impuesto de Valorizacion, a tax to recover three fourths of the land value increments generated by public works constructed in Medellin by agencies at the national or departmental level without the participation of the municipal government. [5]
