R.I.P. to wine importers

Article published on June 19 in the newspaper “La República”.

Colombia has positioned itself as a cosmopolitan country in gastronomic matters. Not only in the main cities, but also in the intermediate ones, there is an interesting offer of bars and restaurants that generate wealth and employment on a large scale.

Within the gastronomic business, wine is an essential product, as it helps to stabilize and keep food prices low, by transferring to a non-perishable product the added value that a customer has to pay. All this could change in the short term due to one factor: the imminent disappearance of independent wine importers for the reasons explained below.

From the issuance of Law 1816 of 2016, it was determined that the taxable base of the excise tax on spirits, wines and aperitifs would be made up of two components: a specific one and an "ad valorem" one.

The fixed component would be determined by the volume of alcohol contained in the product, expressed in alcoholimetric degrees, and the ad valorem component would be determined by the retail price per 750cc unit, certified annually by the Dane.

The trade directors have stated that the Dane is not the entity that should be performing this function because, although it is a technical entity, it does not know how to compose the retail price. Its methodology, in which all channels are averaged, has generated a tax increase of up to 400%, making such products less and less consumed by the public.

Last May 31, 2019, Decree 952 was issued by the Ministry of Finance, which determines the criteria to be used by the Dane for the determination of the Retail Price (PVP). This regulation, far from fixing the problem, raised to the level of a decree the methodological errors that had been used by the Dane.

For the sector's businessmen, the solution would be to return to the methodology established by Law 788 of 2002, which took as taxable base the specific component by alcohol content and did not delegate to a public entity the establishment of the taxable base without a system and a method previously defined by the Law.

In addition to being inconvenient, this system of setting the taxable base by the DANE could be declared unconstitutional, since the Political Constitution clearly requires that the elements of each tax be set by the legislator, and not leave elements to be determined by other entities without a clear system and method determined by the law itself (principle of legality of the tax). For this same reason, Article 121 of Law 488/1998, which established that the taxable base of the gasoline surtax would be the reference retail value certified monthly by the Ministry of Mines, was declared unconstitutional by judgment C-030/2019.

While all these issues are being defined, wine importers are disappearing. Statistics indicate that, compared to 2017, today half survive. The State, by mandate of the Constitution (Articles 333 and 334), has the obligation to strengthen and stimulate business development, to prevent obstruction and restriction of economic freedom and to rationalize the economy. The State must intervene immediately to prevent the imminent death of this sector, the massive dismissal of its employees and the triumphant entry of smuggling.

Document

R.I.P.-a-los-importadores-de-vino_​ENG.pdf

Want to know more?