A request not to apply tax increases on alcohol and cigarettes
Companies: It will reduce production and give incentives for contraband and tax evasion
Argénida Romero
SD. The representatives of the industries that produce rum, beer and cigarettes suggested yesterday keeping the Selective Consumer Tax at the current levels and not apply the increase stipulated for 2015 according to what was established in the tax reform of 2012.
The economist Roberto Despradel, spokesman for the associations that bring together the producers of beer, rum and cigarettes, noted in a visit to Diario Libre that the tax increases for these sectors have caused an increase in prices of their products and as a result, have reduced their sales volumes.
He assured reporters that this dynamic has also stimulated contraband and tax evasion with merchandise that does not comply with the regulations now in force or with the payment of taxes.
He explained that the negative effect of new taxes on rum has reduced the sales by 23% during the January - August 2014 time frame, in relation to the same period before the last tax reform of 2012.
"This behavior maintains tax collections stagnant, contrary to what the government had projected," said Despradel.
In the case of cigarettes, he said the decrease has been some 29% in the period between January and August 2014 and 2012. At the same time the decrease in beer sales has been 15.2%.
He argued that this reduction in the formal sales has represented some RD $4.5 billion in lost tax revenues for the year 2013 and what is expected of this year.
The representatives of the Dominican Association of Beer Producers, the Association of Rum Producers, and the Association of the Cigarette Industry insisted that the new tax increase for next year will seriously affect the production of the sectors, contradicting the tax collection projections by the state.
The last tax reform established that, for 2015, malt beers (except malt extract) and wine from fresh grapes will pay a tax of RD $540.10 for each liter of pure alcohol, and at the present time they are paying RD $514.10; in the meantime vodka, rum and whiskey will go from RD $457.30 to RD $498.40.
Law 253 - 12 also says they should pay a selective consumer tax of 10% on the retail price.
At the same time the law says that cigarettes that contain tobacco will pay a tax of RD $50 in 2015 and not the RD $45 which are now paid for a pack of 20 cigarettes. The smaller 10 cigarette back will go from paying RD $22.50 to RD $25.
The economist Roberto Despradel, spokesman for the associations that bring together the producers of beer, rum and cigarettes, noted in a visit to Diario Libre that the tax increases for these sectors have caused an increase in prices of their products and as a result, have reduced their sales volumes.
He assured reporters that this dynamic has also stimulated contraband and tax evasion with merchandise that does not comply with the regulations now in force or with the payment of taxes.
He explained that the negative effect of new taxes on rum has reduced the sales by 23% during the January - August 2014 time frame, in relation to the same period before the last tax reform of 2012.
"This behavior maintains tax collections stagnant, contrary to what the government had projected," said Despradel.
In the case of cigarettes, he said the decrease has been some 29% in the period between January and August 2014 and 2012. At the same time the decrease in beer sales has been 15.2%.
He argued that this reduction in the formal sales has represented some RD $4.5 billion in lost tax revenues for the year 2013 and what is expected of this year.
The representatives of the Dominican Association of Beer Producers, the Association of Rum Producers, and the Association of the Cigarette Industry insisted that the new tax increase for next year will seriously affect the production of the sectors, contradicting the tax collection projections by the state.
The last tax reform established that, for 2015, malt beers (except malt extract) and wine from fresh grapes will pay a tax of RD $540.10 for each liter of pure alcohol, and at the present time they are paying RD $514.10; in the meantime vodka, rum and whiskey will go from RD $457.30 to RD $498.40.
Law 253 - 12 also says they should pay a selective consumer tax of 10% on the retail price.
At the same time the law says that cigarettes that contain tobacco will pay a tax of RD $50 in 2015 and not the RD $45 which are now paid for a pack of 20 cigarettes. The smaller 10 cigarette back will go from paying RD $22.50 to RD $25.
Argénida Romero
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