Coffee Growers Alarmed by VAT Hike in De la Espriella’s Fiscal Bill

The Colombian government of Abelardo de la Espriella’s proposal to raise the value-added tax (VAT) on coffee from 5% to 19% has sparked concern across the coffee sector, which fears the measure could ultimately hurt both producers and domestic consumption of one of the most representative products of the national economy.

The initiative is part of the Economic Rescue Bill, introduced before Congress on Thursday by Vice President José Manuel Restrepo and Finance Minister Miguel Gomez and Justice Minister Ivan Cancino. The bill seeks to increase government revenue and reduce the fiscal deficit, but includes tax changes that could affect the prices of several everyday food products.

Coffee growers alarmed by VAT hike in De la Espriella’s fiscal bill

The coffee sector’s concerns center on the potential consequences of the tax change for an industry that supports hundreds of thousands of rural families and is one of Colombia’s leading export sectors.

German Bahamon, general manager of the National Federation of Coffee Growers (FNC), has repeatedly stressed the need to protect growers’ profitability and encourage domestic consumption. The industry leader has warned that tax decisions must take into account the specific characteristics of the coffee supply chain and their effects on those who depend directly on coffee farming.

“Colombia needs to restore stability to its public finances (…). However, we are deeply concerned about the proposal to raise the VAT on coffee from 5% to 19%,” the head of the FNC wrote this morning.

Bahamon noted that “Colombian coffee has faced significant increases in consumer prices and has nevertheless managed to maintain substantial consumption levels, but that resilience has its limits.” The FNC warns that “an increase of this magnitude could reduce demand, hurt the domestic industry and undermine the efforts we have been making to promote consumption of 100% Colombian coffee.”

The coffee industry leader concluded with a direct appeal to the government: “From our technical standpoint, we urge the government and Congress to reconsider this proposal,” Bahamon said.

Colombia necesita recuperar la estabilidad de sus finanzas públicas. Es una responsabilidad que debemos asumir como país, con decisiones que permitan corregir el rumbo fiscal y fortalecer nuestra economía.

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Sin embargo, nos preocupa profundamente la propuesta de incrementar del 5% al 19% el IVA al café.

El café colombiano ha enfrentado incrementos importantes en su precio al consumidor y, aun así, ha logrado mantener niveles significativos de consumo. Pero esa capacidad de resistencia tiene límites.

Un incremento de esta magnitud podría contraer la demanda, afectar a la industria nacional y debilitar los esfuerzos que venimos realizando para promover el consumo de café 100% colombiano.

Además, podría incentivar la sustitución hacia cafés importados de menor precio, en detrimento del valor agregado que generamos en nuestro país.

Detrás de cada taza de café colombiano hay cientos de miles de familias productoras, una industria que genera empleo y una cadena de valor que aporta al desarrollo económico nacional.

Compartimos la necesidad de recomponer las maltrechas finanzas públicas heredadas, pero gravar aún más el café no es un camino. Aportamos más al país, creciendo el consumo.

Con respeto institucional y desde nuestra orilla técnica, hacemos un llamado al Gobierno y al Congreso para reconsiderar esta propuesta.

Proteger el consumo de café colombiano también es proteger nuestra economía.

— German Bahamon Jaramillo (@GermanBahamon) October 30, 2026

The current debate echoes what happened eight years ago. In 2018, the Federation had already warned that imposing taxes on coffee sales and the inputs used to produce it could reduce coffee growers’ incomes, drive up production costs and undermine the sector’s competitiveness. It also warned that a tax increase could undermine efforts to boost domestic consumption.

The concern is particularly significant at a time when producers are facing challenges related to the exchange rate, with a weaker dollar hurting export earnings. On October 22, Bahamon said the appreciation of the Colombian peso had caused losses of nearly 2 trillion pesos (about US$635 million) for the economies of coffee-growing regions over the past 12 months.

According to his estimates, coffee growers have been receiving approximately 700,000 pesos (about US$225) less per carga — a unit equivalent to 125 kilograms — as a result of the Colombian currency’s performance against the dollar.

A daily staple that would lose its preferential tax rate

The Economic Rescue Bill proposes eliminating the reduced 5% tax rate on roasted coffee starting January 1, 2028, subjecting it instead to the standard 19% value-added tax (VAT). The change would also affect other everyday household staples, including sugar, cooking oils, pasta and drinking chocolate.

The measure represents a 14-percentage-point increase in the tax rate and is part of the government’s strategy to broaden the tax base. It does not mean that the standard VAT rate would increase, as it already stands at 19%. Rather, certain existing preferential tax treatments would be eliminated.

A higher tax burden could be partially passed on to consumers through higher prices, although the final impact would depend on companies’ pricing decisions and market conditions.

That prospect also raises questions about domestic consumption, particularly among low- and middle-income households for which coffee is a regular purchase. A potential price increase could change buying habits and encourage consumers to switch to cheaper alternatives, including blends containing imported coffee.

The Federation has previously stressed the importance of protecting Colombian coffee’s origin and preventing domestic producers from losing ground to foreign products. Over the past 12 months, Colombia imported approximately 1.55 million bags of coffee, while domestic consumption stood at around 2.4 million bags.