Hendrik Kelner, tobacco expert and founder of Procigar (Association of Cigar Producers) in the country, said he hoped that the proposal for a tobacco tax, made by US congressmen, does not materialize, while the Minister of Industry and Commerce and Mipymes, Ito Bisonó, has valued the efforts made from today, upon his arrival in Washington.
Kelner cautions that If this tax is applied to tobacco, the country would stop exporting more than US $ 500 millionThousands of jobs would be lost, but it would also affect the economic and social stability of the Dominican Republic.
Kelner also warned that, as the first impact of the special tobacco tax, thousands of peasants who sow this product “would become migrants.”
Tobacco, he said, is the item that most facilitates smallholdings, it would be an attack on the economy, social, culture and the stability of the economy.
The special tax that the US congressmen analyze is not an advalorem, it would be the weight of the exported product, he indicated. In the hand cigar, the tax ceiling is currently 0.40 cents on the dollar. and it wants to rise to about US $ 2.80, six times more.
US congressmen took up the idea of increasing a tax on tobacco exported to their market, at a time when the Biden government seeks to tax some products to increase revenues.
The measure debated by congressmen in the States seeks to raise the tax on the weight of tobacco exported to the United States by 600%, a measure that will affect the branch tobacco, and the cigar – cigars – manufactured in the country.
According to Kelner, a large percentage of the market would be lost, since if US $ 1.2 billion are exported this year alone, there will be a drop of nearly US $ 500 million in exports.
Explained that if production drops, 40,000 direct jobs would be lost, of which 20,000 would be in companies and 20,000 in the field, where it would be more dramatic, covering the production and marketing chain.
Kelner stressed that the tobacco industry is culture and citizenship, since it was formed in the 19th century in a society of free men who owned their land and its products, with which the family was sustained and was fundamental in the war of the Restoration and in the Constitution of Moca.
In the country, the major tobacco producing provinces are Valverde Mao, Santiago, Villa González, Navarrete, San Pedro de Macorís, Montecristi, Bonao, Cotuí, Yamasá, Bayaguana and more recently in the South.
JAD reacts
The Dominican Agribusiness Board (JAD) deplored the intentions of the US congressmen and demanded that the Dominican community based in that nation, the commercial and business associations and Congressman Adriano Espaillat assume the defense of the country’s tobacco industry.
Osmar Benítez, executive president, said that the tobacco industry is an icon of the Dominican idiosyncrasy, a country brand that this year will export US $ 1 billion.
He indicated that the tax, if applied, would strongly affect local production because the country is the world’s leading exporter of fine cigars and the main supplier of cigars to the United States market. Benítez, who was recently Minister of Agriculture, explained that the measure would affect thousands of producers.
Industry and Commerce
The head of the MICM, Minister of Industry, Víctor -Ito- Bisonó, specified that “attention to the role that President Luis Abinader has set for us in this regard, we have coordinated a series of direct approaches in Washington, DC, with legislators, various agencies and policy makers. decision in this city, to share the importance of the tobacco sector in the economy, and the social, economic and migratory consequences that could derive from an eventual approval of this tax package ”.
“Supporting the tobacco sector, as well as promoting its development, is part of the MICM’s daily agenda in response to the strategies we have structured in this regard and to which we personally monitor from our office,” added Bisonó.
Exports from the tobacco sector grew by 49.8% when comparing the period January-September 2021 with the same period in 2020. Total exports for this year are estimated to exceed 1.2 billion dollars.
This sector has proven to be one of the most resilient in our economy and a fundamental part of the plan to relaunch free trade zones, which is also coordinated by this Ministry.
Still in a pandemic, we have moved forward, with an increase of 65% in tobacco exports to many markets, mainly to the United States, going from 500 million dollars in 2020 to 824 million so far this year, from January to August , and it is projected that by December we will reach US $ 1.2 billion.
They value government efforts
Ciro Cascella, executive president of Fuente Cigar LTD, explained that as a representative of the tobacco sector, he monitors the situation that has arisen in the United States.
“However, we welcome the determination of the Dominican Government to send a commission to Washington to dialogue with Congress and show that new taxes on a Dominican stellar product such as tobacco would be counterproductive.”
He argued that in direct and indirect jobs, there are more than 120,000 people who today live from tobacco and its production, 120,000 working families who earn their livelihood in a dignified way and allow forging a Dominican brand of global prestige.
Cascella assured that the sector is very satisfied with the work being done by Minister Bisonó, who from the first moment is empowered on the issue and has given it adequate follow-up.
Relaunch plan
Since October 2020, the Ministry of Industry, Commerce and MSMEs (MICM) has been the coordinator of the Tobacco Industry Relaunch Plan, an initiative that includes various lines of action, one of which has to do with defense, at the national and international level, of the Dominican productive sector in the face of anti-tobacco regulations.
In the United States, a tax initiative is being discussed, which was already known and approved in the lower house and that, if approved in the Senate, would have an extremely negative impact on exporters of tobacco, handmade cigars and mechanized cigars. .
In United States
As reported by the Dominican ambassador in Washington, Sonia Guzmán, it is on the table to raise 600% to the tobacco tax.
Migration
Hendrik Kelner warned that a farmer with 30 tasks will migrate if the tobacco tax is applied, because the question is what other task will be profitable if it is not with the planting of tobacco.
Expert
Manuel González Tejera, agricultural specialist, cites the importance of tobacco, which between 2012 and 2020 reached a large export. In 2020, the exported value of tobacco and substitutes reached a value of US $ 937,098,774, based on Customs data.
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