“Government Prepares ISC Increase as Business Groups Warn of Price Rises and Inflation”
La República reports:
“An increase in the ISC would not only raise the prices of various consumer goods, but would also have regressive effects on the most vulnerable population, reducing families’ purchasing power and making the cost of living more expensive,” the CCL stated.
“[The measures] will affect all mass-consumption products, raising prices, fuelling inflation and promoting contraband,” the Peruvian Shopkeepers’ Association added.
Assessment
Raising the ISC on alcohol is an evidence-based health measure. Higher alcohol taxes reduce alcohol use and the harm that follows, and they raise public revenue – which is why Movendi welcomed Peru’s earlier alcohol tax reform. The Ministry of Economy’s plan would build on that.
The opposition is led by the alcohol industry’s business allies. The CCL itself hosts Peru’s alcoholic-beverages guild, whose members include AB InBev‘s local arm Backus, Diageo, Pernod Ricard and Campari. Their arguments follow a familiar script. The claim that the tax is “regressive” inverts the evidence: alcohol harm falls hardest on low-income households, and they gain the most when higher prices bring use down, as Lithuania’s tax increase showed, with alcohol-related deaths falling and health inequalities narrowing. The warning about “contraband” is the illicit-trade scare deployed against alcohol taxation worldwide; the WHO’s tax manual is clear that a possible illicit market is to be managed through enforcement, not treated as a reason to keep alcohol cheap.
A separate question is who should set ISC rates. Bill 536, which has cleared committee and awaits a floor vote, would return that power from the executive to Congress. This is not an unusual arrangement; however, the public-health concern is about its likely effect. Rate-setting in Congress is more exposed to lobbying than a decision taken inside the finance ministry, and Peru’s 2018 increases on alcohol and other harmful products were enacted by executive decree. Notably, Bill 536 is backed by the CCL – the same group now leading the opposition to the increase.
The health case is straightforward: alcohol is a leading risk to health in Peru, and taxation is one of the most effective tools to address it. What to watch now is whether the ISC increase survives the opposition, and whether Bill 536 shifts who sets alcohol tax rates in the years ahead.