New tax on liquor, smokes has free zone merchants angry
Business owners operating in the Corozal Free Zone are tonight up in arms over a massive increase in taxes placed on the zone’s most popular products. According to recently gazetted Statutory Instrument 107 of the Free Zone Social Fee Order 2005, all whiskey, brandy, rum, gin, vodka, liqueurs, cordials, wines, beer, stout, and cigarettes will now incur an additional eight and a half percent levy, taking the social fee on those goods to ten percent, the rate that already exists on fuel. This afternoon businessman Santino Castillo, the owner of BELMEX in the zone, told News Five that the new charges, which will come into effect tomorrow, will have disastrous consequences.
Santino Castillo, Owner, BELMEX, Free Zone
“It will have a trickle down effect right across the board. A lot of people coming in to buy liquor, their wives, their families, buy other products, I’m talking food products, groceries, clothes, bicycles, whatever. When they stop coming, just like you said, right now the free zone has lost a lot of business due to the increase in fuel and they used to come to buy fuel, now they don’t anymore, the Mexicans now buy fuel in Chetumal. If you stop them from coming to buy liquor, it won’t even be worth having a Free Zone, I think that you will see, I just told you that seventy percent of the Free Zone business is liquors, you might see a seventy percent decline in the free zone and I’m talking legitimate sales to Mexicans, which is what it was meant for.”
“It is my opinion that this tax was put on, it might have nothing to do with contraband, because obviously it won’t stop contraband… they’re still contraband in Mexican beer from the Chetumal and ten percent won’t negate the duties on beer for example which is almost five hundred percent. What I believe this is all about is I just believe it is an added tax and that’s my opinion. And I believe it is a tax where Belizeans won’t feel it directly, so they won’t get riled up and make a lot of noise. It’s affecting the free zone people and so we have to fight it…so the populace won’t really get riled up.”
“I am hoping that the Prime Minister will listen, will reason with the businessmen from the Free Zone and realise this is suicide where the free zone is concerned. I believe that if they consult with Don Florencio Marin, who is their representative there, they will see that this is not the smart thing for the free zone. We are suggesting to add another percent, a social fee, to all the products that were carrying the one and half… put on another one percent, make it two and a half, but for Christ’s sake, way to ten percent on liquors which is what the Mexicans come in to buy? That’s the reason why the Free Zone was open, better close down the Free Zone.”
Castillo has joined a consortium of business owners in the zone in a petition to have the implementation of S.I. 107 postponed. The zone operators are also calling for a meeting with the Prime Minister to discuss alternatives. The new taxes in the Free Zone follow the pattern already set in the real estate field, in which the transfer tax for foreign land buyers was raised from ten percent to fifteen percent. As in the case of the new Free Zone taxes, while the move is politically easy, because it does not directly affect Belizean consumers, it may well backfire by reducing the level of investment that Belize’s economy so badly needs.
