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The Colombian Government Has Put a Controversial Tax Reform on the Agenda. The Proposal Presented by President Gustavo Petro Aims to Raise More Funds to Finance the 2026 Budget. However, the Greatest Impact Is on Gasoline, Diesel, and Even Ethanol, Fuels That Are Part of the Population’s Routine. Therefore, the Announcement Already Causes Reactions, Debates, and Concerns Across the Country.
The government of Colombian President Gustavo Petro presented this week its second tax reform. The proposal aims to raise 26.3 billion pesos, about R$ 35 million, to complement the General Budget of the Nation for 2026.
Among the central measures is the progressive increase of VAT on gasoline and diesel, until reaching the general rate of 19%. Currently, gasoline pays 5%, and diesel practically pays no tax. The goal is to reach total taxation by 2028.
In the case of gasoline, the rate increases to 10% in 2026 and reaches 19% in January 2027. Diesel will have 10% in 2026 and 2027, rising to 19% starting in January 2028.
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Additionally, the reform expands the carbon tax and extends the 19% VAT to ethanol, which is expected to further increase fuel prices.
Official Speech and Reaction
Petro defends the measure, claiming that those most affected will be the higher income sectors. According to him, gasoline is primarily used by those with high-cylinder or four-door cars.
“When we talk about taxes on high-powered vehicles, we are taxing gasoline, yes. But the poor hardly ever use gasoline. Those who use gasoline the most are four-door vehicles,” he stated.
The statement, however, generated a strong reaction. Political and economic sectors warn that the rise in fuel prices affects the entire population, including low-income families who rely on individual transportation to work and move around.
The Size of the Fleet in Colombia
Data from the National Transit Single Registry (Runt) show that the country has around 19.8 million vehicles in circulation.
Motorcycles account for 62% of the fleet (12.3 million). Four-wheeled vehicles make up 37% (7.3 million). The remaining 1% corresponds to machinery, trailers, and semi-trailers (218,958).
By December 2024, there were 3.9 million cars, 1.8 million vans, and 754 thousand campers. On average, for every car, there are three motorcycles, and for every van, there are almost seven motorcycles in the country.
Another important fact: 95% of the fleet consumes gasoline (18.7 million units). Only 5% (1.06 million) runs on diesel.
According to the Ministry of Finance, in 2024, Colombians consumed daily 6.0 million gallons of regular gasoline and 6.1 million gallons of diesel.
Who Uses Motorcycles
Motorcycles are essential for the mobility of those with lower incomes. The Chamber of the Motorcycle Industry of Andi reports that most buyers belong to strata 1, 2, and 3, earning between one and three minimum monthly wages.
According to the survey, 91% of new motorcycle buyers are in this income range. This reinforces the role of motorcycles as a cheap and accessible transportation alternative.
The educational profile of buyers is also varied: technicians and technologists (41%), university graduates (30%), and bachelor’s degree holders (27%).
Additionally, the vehicle has become a source of income. The study indicates that 12.9% buy motorcycles to increase earnings and 20.9% use them for both transportation and work.
This scenario is quite different from countries like the United States, where motorcycles represent less than 5% of the fleet and are mainly used for leisure. In Colombia, they have a central economic and social role.
How Much Can Gasoline Rise
Calculations from the president of the Fundación Xua Energy, Julio César Vera, indicate that the gallon of gasoline could rise by 1,783 pesos, about R$ 2.50, if the reform is approved.
The Confederation of Retail Fuel and Energy Distributors (Comce) estimates an even greater impact: 2,012 pesos per gallon (“R$ 2.82”). Currently, the national average price is 15,868 pesos (“R$ 22.26”).
The increase is due to three main factors: the carbon tax, which will rise by 94%; the VAT on fuels, which will reach 19%; and the inclusion of ethanol in the charge.
How the Price Is Formed
The final price of gasoline in Colombia is already composed of a number of taxes and tariffs, which together weigh directly on the consumer’s pocket. Among them:
- Producer Revenue
- Ethanol Producer Revenue
- National Tax
- VAT on Producer Revenue
- Carbon Tax
- Marking Fee
- Transportation Tariff via Pipelines
- Ethanol Transportation Tariff
- Continuity Plan Margin
- Wholesale Distributor Margin
- VAT on Wholesale Distributor
- Surtax
- Retail Distributor Margin
- Evaporation Loss
- Transportation from Plant to Pump
With so many components, any new charge increases the amount that the consumer pays at the pump. Therefore, the reform is expected to intensify the pressure on family budgets.
Open Discussion
The government insists that the reform is essential to fund social programs and maintain fiscal balance. Petro argues that the bill will fall primarily on the wealthy, owners of large, high-consumption cars.
On the other hand, experts remind us that motorcycles and small cars, used by millions of low-income workers, also depend on gasoline.
The debate, then, is not just economic. It reflects a contest of narratives: on one side, the promise of tax justice; on the other, the fear that the poorest will be heavily impacted.
In practice, the big question is who will pay the bill for the new taxation. And the answer seems to go far beyond the “four-door rich” mentioned by the president.
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