More than half of Colombia’s governors said Thursday that they will not comply with an emergency decree that increased taxes on alcohol and tobacco to fill the national government’s $4.3 billion (COP16 trillion) budget gap.
Following a meeting that was organized by the National Federation of Departments, 17 of the 32 governors decided that they would refuse to increase the sales tax on alcohol and tobacco products from 5% to 19%.
Finance Minister German Avila calculated that these tax hikes would result in half of the revenue needed to fil the gap in this year’s budget.
According to Avila, the economic emergency declared by President Gustavo Petro and the finance decree that seek to increase the national government’s revenue “respects the collection and administration by provinces, ensuring the sustainability of their finances and budgetary commitments.”
But the governors said that the increased taxes on vice would put at risk “the financial stability of local authorities and, with it, investment and resources for healthcare, education, and sports in all regions of the country.”
The governors fear that the tax hike on vice will affect alcohol and tobacco sales, which in turn would affect the revenue of provincial administrations that rely on vice taxes for some of their social programs.
The provincial administrators additionally claimed that increasing the price of vice would incentivize contraband tobacco and alcohol sales.
The governors said that they would approach the Constitutional Court, which is expected to rule on the legality of Petro’s economic decree once the magistrates return from their Christmas holiday.
The president issued the economic decree after the Senate’s finance committee in December decided to sink the finance law that sought to secure the revenue to finance the budget that was approved by Congress the month before.
The Senate’s controversial move comes after years of fighting between the Petro administration and Congress, which refused to approve both the budget and the associated finance plan in late 2024.
