Fábricas de Licores de Antioquia (FLA) has joined the chorus of industry voices warning that Colombia’s tax reform will “incentivize smuggling and adulterated alcohol” (W Radio). It is a familiar script. Whenever governments move to raise alcohol taxes, alcohol producers claim that higher prices will push consumers into illegal markets.
Reviews of international experience show that tax increases do not automatically fuel illicit trade; they reduce consumption and generate revenue as intended. The level of contraband and unrecorded alcohol is determined primarily by enforcement capacity, governance, and existing traditions of informal production – not by the tax rate itself.
Examples from around the world confirm this. Kenya raised alcohol taxes and saw neither a rise in unrecorded alcohol nor a decline in government revenue. Lithuania and Russia implemented substantial tax hikes that reduced consumption and produced marked declines in all-cause mortality. Thailand increased taxes on spirits, with only a slight increase in illegal distilling, and only in communities where this practice already existed, showing that the effect was tied to pre-existing conditions rather than the tax itself.
Research is consistent: illicit trade is not driven by tax hikes but by weak enforcement. Evidence shows that:
- The scale of illicit alcohol markets depends on regulatory and enforcement environments, not on the size of the tax.
- Price differences are not the primary decisive factor in illicit trade; corruption, poor governance, and lack of oversight matter much more.
- Increased alcohol taxes can provide governments with resources to strengthen enforcement, creating a cycle where improved oversight protects revenue, reduces illicit trade, and improves public health.
FLA’s warnings follow the global playbook of Big Alcohol: exaggerate risks, spread fear, and delay reform. But the facts are clear. The real burden on Colombia does not come from taxation but from alcohol harm itself. Hospitalizations, violence, road crashes, and lost productivity already cost society far more than the industry contributes in taxes. Strengthening alcohol taxation is the single most cost-effective way to reduce that harm and at the same time generate revenue for enforcement, health services, and social investment.
Deception is Big Alcohol’s activity to hinder and obscure public recognition of the real effects of alcohol. The focus of the Dubious Five strategy of deception is the public’s recognition of the full extent of alcohol harm, the understanding of the risk caused by alcohol products, and the root causes of alcohol harm and their most effective alcohol policy solutions. Using deception strategies Big Alcohol seeks to fuel cognitive dissonance among the public.
Sources:
- https://www.wradio.com.co/2025/09/02/fla-sobre-reforma-tributaria-del-gobierno-petro-incentivara-el-contrabando-y-el-licor-adulterado/
- Andersson, P. and Dünnbier, M. (2025). Policy Brief: Countering Alcohol Industry Opposition to Alcohol Taxes; A Guide for Advocates. Movendi International: Stockholm, Sweden.