...and while we're on the subject of tequila, absolutely terrifying news out on Mexico's proposed tequila tax. As they say in South Park, YOU BA$TARDS!
arizonarepublic.com
Tequila tax causing uproar in Mexico
National drink is put 'out of competition'
Jose Luis Magana/Associated Press
A liquor store employee checks the inventory of tequila. A new tax on the liquor will raise the price considerably.
By Tessie Borden
Republic Mexico City Bureau
Jan. 30, 2002 12:00:00
MEXICO CITY - New taxes imposed by Congress as the new year dawned are hitting Mexicans right in the shot glass, and makers of tequila, that most Mexican of spirits, are fighting mad about it.
"It puts us completely out of competition," said Francisco González García, president of Mexico's Chamber of Tequila Producers. "There are going to be many imported drinks that become much cheaper than tequila."
Congress passed the new taxes on luxury items and the production of hard liquor and other things in a marathon session that continued as New Year's fireworks exploded over Mexico City. It was lawmakers' response to President Vicente Fox's plan, which died in Congress over concerns poor people would suffer the most, to revamp the nation's tax code and generate more revenue by imposing value-added taxes on food, medicines and books.
Tequila producers awoke to the New Year's day hangover of a 60 percent ad valorem levy. Before, they had paid a flat tax of between $2.50 and $15 per liter, depending on whether the tequila was mixed, pure or aged.
González García said that if the taxes remain, a 750ml bottle of 100 percent blue agave tequila bought in Mexico will spiral to about $50 from about $32. He said the taxes, part of a new budget and fiscal reform law Congress passed to raise about $8.03 billion, threaten to wipe out an industry native to Mexico that in the past six or seven years has managed to attract the palate of the world.
Spirits imported to Mexico, such as rums and brandies, require lower duties. González García said the tax discriminates against a home-grown industry that employs 36,000 people in Jalisco. And, he said, tequila would become cheaper to buy as an import in the United States than in Mexico.
"Tequila is the national identity," he said. "Wherever you go in the world, when you talk about tequila, people relate it with Mexico."
Until about 1995, the nectar distilled from the blue agave was considered a cheap and unsophisticated drink for the working classes, said Jose Antonio García Arista, owner of El Madroño de Mexico, a store that specializes in tequila.
García Arista says consumers in upscale bars then began asking more and more for the spirit, which replaced cigars as the "status vice" across Mexico and in the United States. Reposado and añejo brands, aged two months to a year and more, proliferated to respond to the public taste for a smoother, more full-bodied drink.
Microdistilleries popped up to turn out small batches of premium tequilas in fancy, blown-glass bottles. Even tequila liqueurs appeared that added almond, quince and caramel flavors.
García Arista got curious. He visited Jalisco state distilleries in Guadalajara, Tequila and Arandas, longtime centers for the cultivation of blue agave, the cactuslike plant that is the origin of tequila, the distilled spirit, and pulque, its pre-Columbian country cousin that is still popular among indigenous and working-class Mexicans.
García Arista learned the details of the process, then returned to Mexico City, where he began a tequila collector's club and turned his store from a wine purveyor into a tequila house. He even sponsors a yearly contest, or cata, to decide the three best tequilas in the country.
But now, he watches and worries while tequila producers lobby to lighten the tax burden.
"It will affect us all," he said. "This is going to raise the price, and that will be passed on to the consumer."
Luz Maria Cabo Alvarez, general manager for the Tequila-based distiller Fabrica de Tequilas Finos, said the tax hits the industry at a time when agave is expensive. Agave's long maturation, about eight years, makes for a cyclical crop. A scarce yield during the past two years caused prices for the plant to shoot up to 85 cents a pound from about 4 cents a pound. A single agave plant, which can yield five bottles of tequila, now costs between $21 and $85, depending on weight.
"The raw material has become very expensive," Cabo Alvarez said. "The demand this year was greater than the harvest."
Should the new taxes stand, tequila producers would lose 40 percent of their sales, González García said, adding that since half of all tequila is exported to the United States, smugglers who re-import tequila could make huge profits.
But Carlos Villaseñor Lopez, a taxi driver in Mexico City who grew up in Arandas, does not oppose the tax.
"They (lawmakers) are not hurting poor people with those taxes," he said.
"Tequila is the most assisted industry in the world. People will continue buying it no matter what."
Patrons comment: Can you say the same thing about gold?<G>
González García said he is working with lawmakers for changes. So far, they have agreed to an agave subsidy of about 15 cents a pound. Still, he wants either a larger subsidy or a return to the old structure. If not, he said, producers will take drastic measures.
"We would have to stop production," González García said. "We would have to shut down the industry until we can get a more favorable decision." |
