Colombia's Health Ministry backs the VAT increase on alcohol and tobacco from 5% to 19%, arguing it will protect public health by curbing consumption and related deaths. However, up to 20 governors oppose it, claiming the measure violates territorial autonomy and cuts revenues for health and education. The government has called a meeting for January 19, 2026, in Bogotá to clarify Decree 1474 of 2025.
Decree 1474 of 2025, issued under the Economic Emergency declared by Decree 1390 on December 22, 2025, raises VAT on liquors, wines, aperitifs, and tobacco from 5% to 19%, excluding beer. The government expects to collect nearly 2.5 trillion pesos, directing them to address the economic situation without harming departmental finances, according to the Ministry of Finance and DIAN.
Health Minister Guillermo Jaramillo stressed that the measure will discourage consumption, projecting a 20% drop in wine and 16% in high-alcohol drinks, thereby reducing annual deaths and easing the health system. A World Bank study from September 2025 concludes the hike does not impact territorial finances, preserving allocations for health, education, and sports.
However, 20 of 32 governors invoked the exception of unconstitutionality to avoid implementing the decree, arguing that consumption taxes make up 43% of their tax revenues, essential for core services. The National Federation of Departments warned that higher prices will boost smuggling, as seen with 36% of cigarettes in 2024, causing losses of 1.03 trillion pesos. Former Finance Minister José Manuel Restrepo noted: “Basic economics shows that high taxes lead to more smuggling and less revenue.” Former DIAN Director Lisandro Junco added: “Liquors and tobacco are departmental revenues, but the decree redirects them to the nation.”
Specifics include a 750-peso tax per degree of alcohol on liquors, up to 30% ad valorem, 11,200 pesos per pack of 20 cigarettes, and 2,000 pesos per milliliter of e-liquid in vapes plus 30% more. On January 19, a working table in Bogotá will address concerns and ensure harmonious collaboration between the nation and territories.
