Leveraging tax data and public care investment: Toward a fiscal system in Colombia – Brookings

 

Report on Gender-Responsive Fiscal Policy in Colombia and Alignment with Sustainable Development Goals

1.0 Introduction: Fiscal Policy as a Catalyst for Sustainable Development

In Colombia, significant gender disparities persist across economic and political spheres, including labor force participation, employment, and unpaid care work. These gaps represent a substantial barrier to achieving the Sustainable Development Goals (SDGs), particularly SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities). This report analyzes Colombia’s fiscal policy framework, examining both taxation and public expenditure, to assess its effectiveness in promoting gender equality. It argues that while tax policy neutrality is insufficient to correct structural inequalities, targeted public investment in the care economy presents a high-return strategy for advancing national development objectives and fulfilling SDG commitments.

2.0 Analysis of Sex-Disaggregated Tax Data: Uncovering Economic Disparities

2.1 Key Findings from Administrative Tax Data

Recent initiatives by Colombia’s National Tax and Customs Administration (DIAN) to collect and analyze sex-disaggregated tax data have provided critical insights into the economic standing of women and men. This data is instrumental for designing policies that advance SDG 10.

• Income Disparity: Women are significantly underrepresented at the highest income levels. In 2021, women constituted only 35.3% of the top 1% of income earners and just 23.8% of the top 0.01%.
• Wealth Distribution: Conversely, women show a higher representation in top wealth percentiles compared to top income percentiles. Women accounted for 45.7% of the top 1% of individuals by wealth. This anomaly is likely attributable to intra-household tax planning strategies rather than genuine economic empowerment.
• Tax Burden Neutrality: While the average income tax rate for women is lower than for men, this is a function of their lower average incomes within a progressive tax system. At similar income levels, effective tax rates for men and women are identical. This formal neutrality fails to address the underlying economic inequalities.

2.2 Implications for SDG 10 (Reduced Inequalities)

The tax data reveals that a facially neutral fiscal system can perpetuate and even obscure existing gender-based economic inequalities. The findings challenge the assumption that equal treatment under tax law results in equitable outcomes. To make meaningful progress on SDG 10, fiscal policy must move beyond neutrality and actively seek to correct the structural disadvantages faced by women.

3.0 Gender Budgeting Framework: From Legislation to Implementation

3.1 Colombia’s Legal Commitments to Gender Equality (SDG 5.c)

Colombia has established a robust legal framework to institutionalize gender budgeting, directly aligning with SDG target 5.c, which calls for the adoption of sound policies and enforceable legislation for gender equality. Key legislative instruments include:

1. Ley 2294 of 2023: Establishes the National Development Plan and calls for state coordination to address structural gender inequalities.
2. Ley 2342 of 2023: Regulates the national budget and requires the use of gender budget tracers.
3. Ley 1434 of 2011: Created the Legal Commission for Women’s Equity to oversee progress.

3.2 Implementation Gaps and Institutional Challenges

Despite the strong legal foundation, significant gaps hinder the effectiveness of gender budgeting, impeding progress on SDG 16 (Peace, Justice and Strong Institutions) by limiting transparency and accountability.

• Lack of Data Integration: There is no statutory mandate to use sex-disaggregated data in the budget process or to conduct ex-post gender impact assessments.
• Insufficient Transparency: A lack of detailed, disaggregated information on actual expenditures makes it difficult to track how, or if, allocated funds are spent to achieve gender equality objectives.
• Discontinuity: Gender budgeting measures are often tied to four-year National Development Plans, risking inconsistency across political administrations.

4.0 The Economic Case for Investing in the Care Economy

4.1 The Burden of Unpaid Care Work and its Impact on SDG 5.4

The unequal distribution of unpaid care work is a primary driver of gender inequality in Colombia. According to the National Time Use Survey (2020-2021), women perform over twice as much unpaid care work as men (7 hours and 44 minutes per day on average). This reality directly contravenes the objective of SDG 5.4, which calls for the recognition, reduction, and redistribution of unpaid care. This burden severely restricts women’s ability to participate in the formal labor market, undermining progress on SDG 8 (Decent Work and Economic Growth).

4.2 Macroeconomic Modeling of Care Investments

A gender-aware Computable General Equilibrium (CGE) model, GEM-Care, was used to evaluate the impact of different care policy interventions. The findings demonstrate that public investment in care infrastructure is the most effective strategy for achieving multiple SDGs simultaneously.

• Public Childcare Provision: This intervention delivers the highest simultaneous gains in GDP and women’s labor force participation. An investment equal to 0.5% of GDP could generate approximately 62,000 new full-time jobs for women and 52,000 for men by 2030, with the investment being fully recovered through increased economic activity and an expanded tax base.
• Childcare Subsidies: While also positive, subsidies yield more modest economic returns and are less redistributive than direct public provision.
• Unconditional Cash Transfers: This approach is fiscally less sustainable and may inadvertently reduce formal labor market participation, particularly among women.

These results confirm that investing in the care economy is not merely a social expenditure but a high-return economic strategy that creates a virtuous cycle of inclusive growth, directly advancing SDGs 5, 8, and 10.

5.0 Conclusion and Recommendations for Accelerating SDG Progress

5.1 Synthesis of Findings

Analysis of Colombia’s fiscal system indicates that public expenditure is a more potent lever for advancing gender equality than tax reform. While disaggregated data has exposed how neutral tax laws can fail to reduce inequality, macroeconomic modeling provides a clear blueprint for action. Investing in universal care services, particularly public childcare, unlocks women’s economic potential, boosts national productivity, and generates sustainable revenue. This approach aligns fiscal policy directly with the transformative agenda of the SDGs.

5.2 Strategic Recommendations

1. Strengthen Gender Budgeting Implementation: Colombia should legally mandate the use of sex-disaggregated data and ex-post gender impact assessments in all budgetary processes to enhance accountability and ensure alignment with SDG 5.c and SDG 16.
2. Prioritize Public Investment in Universal Care Services: Scale up public investment in childcare infrastructure as a core economic strategy to accelerate progress on SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities).
3. Enhance Fiscal Transparency: Implement robust systems to track public expenditures in detail, ensuring that funds allocated for gender equality initiatives are spent effectively and transparently.
4. Institutionalize Data-Driven Policymaking: Continue to leverage disaggregated data and macroeconomic modeling to design, implement, and evaluate fiscal policies that actively reduce gender disparities and promote inclusive, sustainable development.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 5: Gender Equality

• The article’s central theme is the persistence of gender gaps in Colombia across labor, economic, and political spheres. It directly addresses the need to achieve gender equality and empower all women and girls by analyzing fiscal policies, unpaid care work, and economic disparities between men and women.

SDG 8: Decent Work and Economic Growth

• The text discusses gender disparities in labor force participation, unemployment, and informal employment. It also explores how investments in care infrastructure can boost women’s formal employment, national productivity, and overall GDP, linking gender equality directly to sustainable economic growth and decent work for all.

SDG 10: Reduced Inequalities

• The article analyzes the distribution of income, wealth, and tax burdens by sex, highlighting how women are underrepresented in top income percentiles. It examines how fiscal policies (taxation and public spending) can either reinforce or reduce these economic inequalities, which is the core focus of SDG 10.

SDG 17: Partnerships for the Goals

• The article emphasizes the critical role of data in designing effective policy. It highlights Colombia’s new regulations requiring the collection of sex-disaggregated tax data and points out the need for similar data on public expenditures. This focus on enhancing data availability and quality for policymaking aligns with the targets under SDG 17 related to data, monitoring, and accountability.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 5: Gender Equality

• Target 5.4: Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies. The article extensively discusses the disproportionate burden of unpaid care work on women (7 hours and 44 minutes per day) and advocates for public investment in universal care services and childcare infrastructure as a key strategy to address this imbalance.
• Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership in political, economic and public life. The analysis of sex-disaggregated tax data, which shows women’s underrepresentation in the top income percentiles (e.g., only 23.8% in the top 0.01%), directly relates to women’s unequal participation in economic life. The article also notes disparities in political representation.
• Target 5.c: Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality. The article details Colombia’s legal framework for gender equality, including gender budgeting laws (Ley 2294, Ley 2342) and the creation of a National System of Equality and Equity, which are policies designed to promote gender equality.

SDG 8: Decent Work and Economic Growth

• Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men… and equal pay for work of equal value. The article identifies significant gender gaps in “labor force participation, unemployment, informal employment” and notes that “only about half of Colombian women are in the labor force.” It proposes that investing in childcare can create “new full-time jobs for women” and boost their participation in the formal economy.

SDG 10: Reduced Inequalities

• Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality. The entire article is an analysis of this target, evaluating how Colombia can use “gender-responsive fiscal policy” (both taxation and public expenditure) to address structural gender inequalities in income and wealth.

SDG 17: Partnerships for the Goals

• Target 17.18: By 2020, enhance capacity-building support… to increase significantly the availability of high-quality, timely and reliable data disaggregated by income, gender, age… and other characteristics. The article highlights the recent initiative by Colombia’s tax administration (DIAN) to collect and analyze sex-disaggregated tax data. It also laments the “lack of budget transparency and sex-disaggregated administrative data on expenditure,” underscoring the need to improve data availability for effective policymaking.
• Target 17.19: By 2030, build on existing initiatives to develop measurements of progress on sustainable development that complement gross domestic product. The article mentions Ley 1413 of 2010, which mandates the integration of data on “paid and unpaid care work into national accounts,” a clear example of moving beyond traditional GDP to measure economic contributions and well-being.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

SDG 5: Gender Equality

• Indicator for Target 5.4: The article explicitly cites data from the 2020-2021 National Time Use Survey (ENUT), stating that “women spend an average of 7 hours and 44 minutes per day on unpaid care work—more than twice as much as men.” This directly corresponds to indicator 5.4.1 (Proportion of time spent on unpaid domestic and care work).
• Indicator for Target 5.5: The article provides data on the “share of women among tax filers” (just under 49%) and, more specifically, the share of women in top income percentiles (“35.3% in the top 1%, 28.2% in the top 0.1%, and just 23.8% in the top 0.01%”). This serves as a proxy for indicator 5.5.2 (Proportion of women in managerial positions) by measuring women’s representation at the highest levels of economic life.
• Indicator for Target 5.c: The article’s discussion of Colombia’s gender budgeting framework, including the use of “gender budget tracers” and mandatory reporting to Congress, directly relates to indicator 5.c.1 (Proportion of countries with systems to track and make public allocations for gender equality and women’s empowerment).

SDG 8: Decent Work and Economic Growth

• Indicators for Target 8.5: The article mentions several indicators:
  • Labor force participation rate by sex: “Only about half of Colombian women are in the labor force.”
  • Unemployment rate by sex: The text notes that “female unemployment remains high compared to the averages of other Latin American and Caribbean countries.”
  • Income levels by sex: It is implied that women have lower incomes, as this is the reason they face lower average income tax rates.

SDG 10: Reduced Inequalities

• Indicators for Target 10.4: The article uses several data points to measure economic inequality and the impact of fiscal policy:
  • Share of women in top income percentiles: As mentioned above, specific percentages are given for the top 5%, 1%, 0.1%, and 0.01%.
  • Share of women in top wealth percentiles: The article provides data showing women make up “49.9% of the top 5% of individuals by wealth” and “45.7% of the top 1%.”
  • Average income tax rates by sex: The article states that between 2019 and 2022, the rate for men went from 9% to 6%, while for women it went from 8% to 5%.

SDG 17: Partnerships for the Goals

• Indicator for Target 17.18: The primary indicator is the availability of sex-disaggregated data. The article’s analysis is built upon the new availability of this data for taxation from DIAN, while it explicitly points to the lack of “sex-disaggregated administrative data on expenditure” as a key gap. This directly measures the country’s statistical capacity for gender-responsive policymaking.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

SDGs	Targets	Indicators
SDG 5: Gender Equality	5.4: Recognize and value unpaid care and domestic work. 5.5: Ensure women’s full and effective participation in economic life. 5.c: Adopt and strengthen policies for gender equality.	– Time spent on unpaid care work by sex (Women: 7h 44m/day, more than double men). – Share of women in top income percentiles (e.g., 23.8% in the top 0.01%). – Existence of systems to track public allocations for gender equality (gender budgeting tracers).
SDG 8: Decent Work and Economic Growth	8.5: Achieve full and productive employment and decent work for all women and men.	– Female labor force participation rate (approx. 50%). – Female unemployment rate (noted as high). – Number of new full-time jobs for women generated by policy interventions.
SDG 10: Reduced Inequalities	10.4: Adopt fiscal policies to achieve greater equality.	– Share of women in top income and wealth percentiles. – Average income tax rates by sex (Men: 6%, Women: 5% in 2022). – Effective tax rates by sex within the same income brackets (noted as identical).
SDG 17: Partnerships for the Goals	17.18: Increase the availability of high-quality, timely and reliable data disaggregated by gender. 17.19: Develop measurements of progress that complement GDP.	– Availability of sex-disaggregated tax data (newly available from DIAN). – Lack of sex-disaggregated data on public expenditures (identified as a gap). – Integration of unpaid care work into national accounts (mandated by Ley 1413).

Source: brookings.edu