The fiscal situation in Colombia has been deteriorating over recent years, as seen in various fiscal indicators. Among the policy actions that can be made to avoid making the situation worse, is the increase of tax collections and thus generate an increase in revenue for the nation. Using a computable general equilibrium model, we estimate the effect of total and partial elimination of current fiscal exemptions. It is found that a full elimination of exemptions, leads to a more neutral tax system, allowing the partial recovery of public finances and economic growth prospects.
