Colombia threatened to cut off foreign liquor imports starting March 1 in hopes to reclaim lost tax on illegal imports, at the National Federation of Departments on Wednesday, reported newspaper El Espectador Thursday.
This measure, proposed by 31 governors of Colombia, is intended to turnaround the ongoing fight against liquor smuggling, which gained notoriety in 2004 when Colombia sued multinational liquor companies, Diageo, Seagram and Pernod Ricard in New York City courts.
Of the 28 million bottles imported into Colombia every year only 6 million were properly taxed, said the governor of Caldas Mario Aristizabal. That means 75 percent of the liquor entering the country is smuggled.
“We believe it is essential to protect the financial department and raise the revenues in each department,” the governor of Huila Jorge Luis Sanchez told Sanchez told newspaper La Republica.
“The purpose of this measure is to close the importation of liquor, to recover national revenues, and to be able to sit at a negotiating table with multinational liquor companies,” said the Huila governor.
The initiative has the support of the president, and the promised cooperation from the Directorate of National Taxes and Customs (DIAN) and the customs police.
DIAN estimates that Colombia loses $200 million annually due to liquor tax evasion, a number that Aristizabal estimates to be closer to $500 million.
This proposal, which is sure to elicit angry responses from liquor distributors, brings to mind the Volstead Act of 1920, which outlawed the production and sale of liquor in the U.S. The prohibition of alcohol in turn created a thriving black market and over 10,000 violent deaths.
However, Sanchez is confident that history will not repeat: “We must use the constitutional authority that each of the regional departments have over the monopoly of liquor. And that means suspend the import permits.”
