Business

The first of three free-VAT days generated COP 5 billion in sales in Colombia

But it also causes 88 large agglomerations in Bogotá, precisely during the escalation of COVID-19 cases in the country

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  • Data released this Saturday show that about 6 million Colombians took advantage of the shopping day, which generated COP 5 billion, but all of this at a high cost: 88 large agglomerations were registered in Bogotá alone;
  • The next two days without VAT will be July 3 and July 19.

Consumers filled Bogotá’s malls and stores on Friday, the first of three days without Value Added Tax (VAT) promoted by Colombia‘s federal government and approved by Congress as a way to reactivate the economy seriously affected by the COVID-19 pandemic. Data released this Saturday show that about 6 million Colombians took advantage of the shopping day, which generated COP 5 billion, but all of this at a high cost: 88 large agglomerations were registered in Bogotá alone.

READ ALSO: Colombia suspends VAT for tourist services for the entire year

The idea was that, after a 40% drop in household consumption in April, the Colombian economy would gain momentum. On Wednesday, President Iván Duque asked the population to enjoy the day but keeping the essential cares to avoid spreading the new coronavirus.

On the day in question, however, officials and newspapers reported real chaos. Bogota’s mayor, Claudia López, was one of many Colombian public figures who denounced the idea as irresponsible, using the term “Friday Covid” on Twitter.

Jaime Alberto Cabal, president of the National Trade Federation (Fenalco), admitted to La República newspaper that many logistical issues and even the behavior of citizens need adjustments, but he described the day as positive “for retail and for the reactivation of economy and employment in the country”. According to him, the 88 registered agglomerations represent a very small part of the 92,000 establishments (50,000 in Bogotá) allowed by the Ministry of Commerce to participate in the event.

READ ALSO: E-commerce grows 12% per week in Colombia, but still falls short of pre-Covid levels

The problem, according to health authorities, however, is that these agglomerations took place amidst the surge in COVID-19 cases in the country, which registered nearly 10,000 new confirmed infections in just five days.

The latest report by the Colombian Ministry of Health and Social Protection brought 3,059 new cases and 95 new deaths from COVID-19. The country today has 63,279 confirmed cases and 2,045 deaths from the disease.

Other data on the first VAT-free day in Colombia

In all, seven product categories were exempt from VAT tax: clothes, clothing accessories, appliances, sports equipment, toys and games, school supplies and supplies for the agricultural sector. The increase in sales varied between 35% and 70% for these categories, according to Fenalco. Appliances, smartphones, and electronics in general were the most sold products.

In addition, 6 million electronic transactions were carried out, according to Credibanco, 58% more than the previous day. MercadoLibre said it had a 583% increase in traffic and a 1000% increase in sales.

READ ALSO: Almost a third of Colombians are planning to travel in 2020

“At certain times of the day, e-commerce platforms collapsed due to excess demand and traffic. They moved 10 times more than a normal day: 100,000 people per hour, on average,” reported Fenalco.

For the next two days without VAT (July 3 and July 19), as a way to reduce the risk of new agglomerations, Fenalco suggests that the sale of appliances and tech products in general should be done exclusively through e-commerce.

The entity also suggested that the authorities reinforce the inspection of activities in the early hours of the morning, as a way of guiding businessmen and consumers on the necessary care for the prevention of COVID-19, in addition to an exclusive four hours period for serving elderly consumers.