Transparency of financial transactions

This law intends to make the use of transactional means of payment mandatory, gradually prohibiting the use of cash. It establishes that, as from January 1, 2017, it will be mandatory to pay with "electronic money" and that a Fund for the Promotion of Electronic Means of Payment will be created, whose purpose will be "the execution and financing of strategies to promote the use of alternative means to cash by micro and small companies and individuals". It indicates that such Fund will be fed with a "contribution of a parafiscal nature" that will come from the tax levied on payments made in cash. As a positive aspect, the regulation establishes that some incentives are generated for the use of transactional payment mechanisms such as the immediate refund of two points of VAT and Consumption Tax for making payments by electronic means.

In conclusion, the bill will penalize the use of cash as a means of payment and will make the use of transactional (financial and banking) payment mechanisms mandatory for the timely compliance of obligations. The proponents justify the bill with banking and environmental arguments. In this sense, they state that: (i) 38% of the businesses carried out in our economy are "submerged", because they are carried out in cash, (ii) during 2014, 54% of the savings accounts in Colombia were inactive (i.e., they had no movement for more than 6 months) and (iii) 72% of the micro-entrepreneurs and 57% of the people surveyed only use cash, and only 32% of the micro-entrepreneurs and 17% of the people use their accounts more than three times a month. Likewise, from an environmental point of view, they consider that: (i) during the last 10 years more than 10 million tons of paper (corresponding to approximately 277,000 trees) have been used for the production of banknotes and (ii) the cost of production of banknotes and coins in the same period amounts to almost $1.3 trillion.

Although the project has positive aspects (such as rewarding the use of electronic money with the immediate refund of certain VAT points), it is inequitable because it conditions the liberatory power of the Colombian currency to business being done through financial channels, and taxes, with an additional contribution, those who prefer to use the Colombian currency in cash for the payment of their obligations.

The big winners of this project are the banks and other financial institutions. With its approval, they will guarantee the attainment of millions of clients.

Congress should consider aspects such as the following: (i) many sectors of the economy subsist on the use of cash and could become extinct, (ii) someone cannot be forced to be a user of the financial system with the transactional costs that currently exist, (iii) the enactment of this law will catapult the income of banks and financial institutions, which in fairness, should also contribute (to a greater extent) to the Fund to be created, since they would be receiving a direct benefit that would have as sole cause the approval of this law.

Finally, if this bill is not substantially modified, it could be sued for unconstitutionality, since it clearly transgresses the principle of legislative rationality, according to which the legislator must clearly measure the economic and social consequences of the laws it issues, under penalty of having them declared unconstitutional for violating the constitutional principles on which they must be based.