The pros and cons of including more taxes on cigarettes

The pros and cons of including more taxes on cigarettes

Given the need to seek new sources of collection in the framework of the discussion of the tax reform project, the idea of ​​putting higher taxes on cigarettes is one of those that has resonated in Congress.

(Increase in cigarette tax would increase smuggling, says the FND).

Even the Minister of Finance, José Antonio Ocampo, has assured that it is a possibility, but that “It is not a large amount in terms of collection.”

in the conversation ‘Taxes and cigarette smuggling: myths and truths’, led by the Anti-Smuggling Program of the National Federation of Departments (FND), the implications of imposing additional taxes on cigarettes were discussed.

Although a higher tax on cigarettes, at first glance, could represent a greater collection for the health and sports accounts of the territorial entities, the FND warned that it could, on the contrary, have a harmful effect, because it would encourage smuggling.

(The vaping companies that the Superindustry is investigating).

“We believe that the increase in the tax burden should maintain the current formula: CPI plus four points per validity. We cannot risk this source of fundamental resources to finance health and sports in the regions”, said Didier Tavera Amado, executive director of the FND.

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Jorge Tovar, associate professor at the Universidad de los Andes, explained that “Any product whose cost increases, its consumption decreases. But, in the case of cigarettes and especially in Colombia, the analysis cannot be reduced to that because there is a substitute: smuggling.”

The academic assured that it has been proven that more than taxes, there have been two other measures that have led to the reduction of consumption, restrictions in public spaces and awareness and prevention campaigns.

A calculation by the teacher estimates that, for every 10% increase in the cigarette tax, contraband sales increase by 7%.

(Cigarette, beer and liquor seized total $3.51 billion).

Among the proposals in relation to cigarettes, for example, is that of the president of the third committee of the House of Representatives, Katherine Miranda, along with 25 other congressmen, who signed a proposal for the project, so that, as of Next year, the tax per 20-unit box is increased from $2,800 to $8,400. This would triple the current tax.

Likewise, last week, several organizations, including the Anáas Foundation, the National Cancer Institute, Red PaPaz and the Center for Studies in Social Protection and Health Economics of the Icesi University (Proesa), also proposed that taxes on tobacco are tripled, but taxes on electronic cigarettes or vapers are also included. These estimated a collection of an additional $1 billion.

LAURA LUCIA BECERRA ELEJALDE

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