BOGOTA, April 15 (Reuters) - Colombia’s government on Thursday formally proposed to Congress a $6.4 billion tax reform that would eliminate many deductions and increase duties on individuals and business. The measure, considered key by financial markets and analysts to manage fiscal pressures caused by the coronavirus pandemic and maintain the country’s credit rating, seeks to boost tax collection by 23.4 trillion pesos ($6.38 billion) a year, equivalent to 2% of gross domestic product. “It is moderate reform if we compare it internationally,” Finance Minister Alberto Carrasquilla said during a virtual presentation. Some provisions of the reform package, which would largely come into force starting in 2022, have already come under fire from opposition lawmakers. It will face a difficult path to approval one year ahead of presidential and legislative elections. Funds raised by the plan would go toward spending shortfalls, social programs and economic rejuvenation. Changes in the law would raise an additional 7.3 trillion pesos from the value-added tax (VAT), 17 trillion from individuals and 3.7 trillion from businesses. It would also raise dividend taxes to 15% from 10%. It would expand a carbon tax to include all fossil fuels and raise 14 billion pesos through a duty on single-use plastics. Colombia’s fiscal deficit widened to 7.8% of gross domestic product last year and the country raised its debt to the equivalent of 64.8% of GDP to address coronavirus-related needs, even as the economy shrank 6.8% and tax collection fell. The government has predicted a fiscal deficit of about $26 billion this year, equivalent to 8.6% of GDP, and economic growth of 5%. Annual tax income in Colombia is equivalent to 19.3% of its $274 billion GDP, while tax deductions are equivalent to about 6.5% of GDP. Credit ratings agencies have said they will review the country’s investment-grade rating if the reform proposal is approved.