Colombians face tax hikes

BOGOTA, Oct. 31 (UPI) -- Colombians are facing higher taxes in the wake of a failed referendum that would have frozen public sector spending.

Last Saturday's referendum was annulled after less than a quarter of registered Colombian voters, the minimum required by law, voted, EFE News reported Friday.

Without the referendum's effects, the government must finance automatic cost-of-living salary hikes that are retroactive to Jan. 1, 2003, by cutting some $700 million in spending and raising taxes.

Colombia's tax troubles stem from the past 10 annual deficits which were financed with foreign loans through bond issues as well as domestic credits.

Debt service now stands at nearly 40 percent of the national budget.