Editorial: President Duque’s “Day Without Sales Tax” Devolves Into Public Health Fiasco

Up until Friday, Colombia’s President Ivan Duque was well regarded for his public health policy decisions in the face of the Coronavirus COVID-19 Pandemic, if not his actual execution. While the country has faced widespread logistical failures in its health system, and in many cases outright corruption, the broad, sometimes tough policy decisions regarding quarantines, curfews, and the shutdown of broad swaths of the economy have been respected if not exactly embraced both domestically and internationally. All that came crashing down when under pressure to reignite the economy, Ivan Duque held the first of his “Dias Sin IVA” or “Day without Value-Added Tax” that he announced as part of a package of measures to spur the Colombian economy.

“We could see that in some parts of the territory there were crowds and disorder also occurred, and, of course, we all regret that situation.” —President Ivan Duque

Colombian news media spent the week beforehand hyping up the day, and the government suspended the curfew measures that had up until then kept Colombian deaths from the COVID-2 Novel Coronavirus under 2,000. When the day arrived, last Friday, all hell broke loose. Even though many of Colombia’s principal retail chains like Falabella and HomeCenter were under investigation for unethical pricing practices, raising their prices to erase the savings that Colombians would otherwise realize by escaping the normal 19% VAT, mass-market consumers flocked to stores creating a “black-Friday” environment.

Twitter Meme: How to make a casket with the box from your new television!

PARA LOS QUE SALIERON EL DIA SIN IVA pic.twitter.com/40D0NX22Oc

— WILSON CASTAÑO (@WilsonC37686776) June 20, 2020

Several large retail stores had to be shut down because they became so crowded, they violated occupancy rules. Giant lines formed outside of many retail establishments, not to check out, but waiting to even enter the store. Retail outlets throughout the country had to shut down because they simply became full beyond capacity. The secretary of health in Cali, Colombia’s third largest city called for stores to be shut down because of crowding.  On Caracol television, epidemiologist Dr. Jaime Ordóñez Molina called Friday a “mistake that should not be repeated.”

The governor of Meta department, Juan Guillermo Zuluaga said “A discount is good for nothing on purchases in the day without VAT if we leave infected with Coronavirus!! Luis Ernesto Gómez in Bogotá confirmed that the discount store Alkosto had to be closed because crowds were out of control in the face of health measures.

The New York Times published an article that started: “Hundreds of thousands of Colombians braved lengthy lines on Friday to take advantage of a one-day lifting of sales tax, even amid a coronavirus quarantine and nearly 10,000 new confirmed infections in just five days…”

COVID Friday

Friday, Bogotá’s Mayor Claudia Lopez took to Twitter to ask the National Government “with the utmost respect to reconsider making another COVID Friday.”

Equivocarse es de humanos, aceptar y corregir es de sabios.

Le ruego al gobierno nacional no provocar otro viernes de Covid que malogre el cuidado.

Basta con determinar que el próximo #DiaSinIVA sea exclusivamente para compras por internet.

Primero la vida que la plata ?? pic.twitter.com/N2NomIVw4V

— Claudia López ? (@ClaudiaLopez) June 20, 2020

Colombia has yet to know what the public health consequences will be from this experiment in going from a strict public health curfew to a retail jamboree. While there are many calls from Colombia’s business sector, members of the informal economy that barely eke out a living, and micro-entrepreneurs in the tourism and entertainment sectors to reopen the economy, doing so in a reckless way unjustified by science not only puts lives at risk, but it jeopardizes the progress and recovery that Colombia dearly needs and the progress relative to other countries that has been made.

“Dia Sin Orden” (Day Without Order)

Many Finance Colombia readers can make valid arguments for reopening the economy, and that’s fine. Do so if the experts say it is prudent, but that could have been done without this “Dia Sin Orden.” Is Colombia’s VAT too high? Yes, Finance Colombia’s editorial position is that it is a brake on growth, however that is a separate issue. Lower the VAT in a fiscally prudent way, reopen stores in an epidemiologically rational way, but this past Friday was a dangerous fiasco that should not be repeated.

The president correctly indicated that “this pandemic and this virus will be present for a much longer period,” and attempting to put a positive spin on the day’s events Friday evening added that ““the truth is that we must learn from the lessons that today leaves us with: the positive ones, which are many, and also learn from those spaces where citizen behavior was not adequate, so that it is not repeated.”

Yes, true. Citizen behavior in some cases left room to grow, but it was Duque’s decision to hold this, the first of 3-total planned “Dias Sin IVA” lifting curfews specifically to fill the stores with shoppers and empty them of merchandise. He got what he wanted, what else could he expect? With many retail outlets having to close due to public health orders, not even they realized the full benefit of the VAT tax exemptions.

Let’s hope the human cost doesn’t far exceed the 19% savings on a brand new big screen TV.

Do you agree or disagree? Comment below.

Front page “Dia Sin IVA” photo used as example and courtesy of Mikel Agirregabiria from Twitter and of a “Dia Sin IVA” in San Vicente de Baracaldo Spain in 2014 from Flicker.