The Tax Restructuring Reform Law of 1991 (Spanish: ) was an act of the Colombian government in 1991, under the Presidency of Felipe Ramón Hernández, meant to simplify the Colombian personal and corporate tax codes to drive stimulate demand-side spending and foreign investment in the wake of the late 1980s economic crisis. Along with the considerably more controversial labor market reform package introduced in 1992, the reforms were the backbone of the Hernández administration's Gran Renovacion policy designed to lead Colombia out of its debt crisis.
On the personal tax side, the law consolidated tax brackets from seven to four, lowered personal tax rates (and eliminated all income taxes for people making less than 120% of the national poverty wage), eliminated most deductions, and raised the value-added tax, easily the most controversial component of the package due to its regressivity. On the corporate side, the administration was able to earn considerably more buy-in from Christian Democrats in the Chamber of Deputies, where the bulk of the debate around the package occurred, by creating a tax credit for manufacturers, making payroll expenses fully deductible, incentives for foreign companies that built plants in Colombia, and waiving the VAT on exports.
Despite overtures to the Social Party by eliminating favorable tax treatment on interest earned or investment income and replacing it with a deduction for interest paid on loans below 5,000,000 pesos, the package was passed exclusively with the votes of Republicans and Christian Democrats. In 1994, during the early days of the Rafael Caldera government, personal income rates were raised above 1990 levels on all but the lowest bracket and the VAT returned to its previous rate, though the business tax side was left largely intact. Debate continues in Colombia about the efficacy of the tax reform - many contend that Colombia's strong economic growth in the 1990s was structural, thanks first to the early 1990s rise in oil prices and then later on thanks to the general global economic boom, while conservatives tend to credit the Gran Renovacion primarily for the turnaround in the country's post-crisis economy.