The Dominican Association of Rum Producers (Adopron) warned that an increase in the Selective Tax for Alcoholic Grade would increase the disproportionate inequality between the different categories of beverages and it would encourage the growth of the illicit market.
“ORA tax change of this nature will reduce collections and it will expose lower-income consumers to the risk of poisoning due to the consumption of adulterated lower-priced beverages, as they are deprived of the right to purchase legal products that guarantee their safety ”, warned the members of the entity, which groups together the most traditional brands and recognized in the country, through a statement.
They stated that the 2012 tax reform had a devastating impact on the Dominican rum industry, generating a drop in sales of more than 30% that to date has not been recovered.
They added that this also led to a drop in real collections of some RD $ 3,000 million. The State had to wait 6 years to recover the revenues it received prior to the reform.
“Encouraged by the excessive tax burden of the lowest-priced segment, an illegal market was generated that reached 3 million liters in one year, defrauding the State for more than 2,000 million in annual taxes and making unfair competition against legal producers who comply with all the regulations and honor all their commitments, ”Adopron said in a statement.
They argue that high taxes also led to the emergence of a clandestine industry that produces and markets toxic beverages that have killed hundreds of people in the past 18 months.
“The Ron dOminican is the product with the highest Effective Tax Rate in the country, representing 70% in the low price segment. He indicated that in proportional terms, rum pays more than double the taxes than the rest of alcoholic beverages, both local and foreign. In other words, a national product that represents a country brand is penalized much more than imported products ”, they point out.
They emphasized that an increase in the Selective Tax for Alcoholic Grade would increase the disproportionate inequality that exists between the different categories of beverages and would foster the growth of the illicit market, reducing collections and exposing lower-income consumers to the risk of intoxication due to the consumption of adulterated beverages. lower price, as they are deprived of the right to consume legal products that guarantee their safety.
“We recognize the need for the Government to increase its income to face the difficult scenario we are currently experiencing and we are committed to collaborating to identify possible, reasonable and equitable scenarios that allow increasing revenues without causing serious damage to companies and society” , specifies the organization.
Finally, he stressed that Dominican rum is one of the industries that provides the most value, tangible and intangible, to the Dominican Republic and if you are asphyxiated with disproportionate taxes you would be condemning companies to bankruptcy that have produced a valuable country brand for more than a century.
“We ask for equity, that we all contribute in the same way to the country that we deserve!”, Concludes the note.