The idea of Commerce secretarywhich leads Pablo Lavigneis to advance with the entry of products food, drinks, Cleaning products and careful and personal hygiene. Some will even be applied tax discounts to give them competitiveness and Central Bank (BCRA) will reduce the payment scheme for imports of these items.
Food imports in Argentina are insignificant: in January it represented only 23% of the total, some US$110 million between processed and unprocessed foods. In the first month of the year, the income of basic foods for the home it was US$34 millionwith a drop of 33% year-on-year and produced was US$75 million, with a retraction of 5%as measured by National Institute of Statistics and Censuses (INDEC).
Between the products that will be able to be imported appear since meats, fish, dairy products, infusions as yerba mate, fruits, nuts, dates, flour, wheat seeds, cocoa, corn, food preparations as pastas, sauces and baked goods, non-alcoholic drinks and beers.
Furthermore, the Government decided to suspend, for the period of 120 dayshe collection of additional VAT collection and income tax to imports of these products and medicines. “This measure will encourage import of basic basket products whose price in the local market is higher than the international price, which will contribute to a greater competition and, consequently, to a fall in inflation and in the price level of these products,” they said from the portfolio.
The truth is that the large food companies in Argentina they raised prices speculating with a dollar of $1,500 for the present, something that never happened. But, nor did they retrograde the values to a current financial exchange rate of around $1,080.
A business source pointed out Ambit that Argentina “the importation of food is not closed”since for this you must have the approval of the National Agri-Food Health and Quality Service (SENASA) and the merchandise has to meet all the requirements, even the black octagons required by law.
Imports currently have a 12.5% import tariff if they do not belong to Mercosurfurther 3% statistics rate, 21% VAT and additional 20%, 6% Income Tax withholdings and a 3% of Gross Income.
Those arriving from Uruguay, Brazil, Paraguay or any country with which this economic bloc has a trade agreement will enter without tariffs or with reductions in them.
Opening of imports: what economists and companies think
Currently, products from neighboring countries are not competitivepointed to Ambit the economist and specialist in foreign trade, Miguel Ponce. “Surely if taxes were lowered, it could be at competitive values,” she added.
In that sense, Ponce considered that This is not a measure to “stop inflation”, But what the Government does is set “competitive prices.” However, it does not guarantee that there is a real brake on price increases.
“We have experiences of opening imports as in times of José Alfredo Martínez de Hoz -during the dictatorship-, Sunday Cavallo -90’s- and the most recent of Mauricio Macri. In the three previous cases, the result was a infernal pymescide“, launched the foreign trade specialist.
In these contexts of opening up imports, the national industry is highly harmed due to the recession generated by the process. Ponce classified it as a “non-virtuous” circuit: the company cannot obtain greater profitability because the market begins to contract and, in turn, there is less consumer power, a drop in sales and productive activity, which translates into greater unemployment and increase of poverty.
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From the Argentine Industrial Union (UIA) They complained about the measure in a statement, and demandedr “unequal treatment for the industry”, since they do not have access to dollars in 30 days or a tax reduction.
“While national producers must pay in four monthly installments and with COUNTRY TAX for the inputs necessary for manufacturing, importers of finished goods will be exempt from taxes and will have full access to the necessary foreign currency in a single 30-day payment,” they noted from the Industrial Union.
In contrast to the UIAfor the chief economist of Freedom and Progress Foundation, Eugenio Marithe opening of imports “implies greater competition that will benefit consumers with more variety and lower prices.”
Although he warned that the exemption of productive inputs used by Argentine companies producing goods could moderate their “positive impact”. He also highlighted that the “transience” of the measure could be taken advantage of by importers that are already consolidated, but “it is unlikely to encourage the entry of new ones.”
“In addition, it must be taken into account that other taxes are still in force that greatly increase the cost of imported products. There are goods in the basic basket of the 21st century that have up to 35% tariff, COUNTRY tax of 17.5% and statistical rate of 3 %”, added the economist Freedom and Progress Foundation.
The opening of imports seeks mitigate inflationNow, as Ponce stated, the measure is in line with price competition, but this does not guarantee that there will be a real brake on price increases. Furthermore, the benefit goes to companies that import finished products instead of granting benefits to Argentine companies, either to produce or to the final consumer themselves for the purchase of the basic basket product, as happened last year.
Recently, the IARAF (Argentine Institute of Fiscal Analysis) created a report on the basket of 9 mass consumption productswhere it indicated that national, provincial and municipal taxes represent 43.9% of the final price: the basket today has a value of $50,064, of which the tax burden is $21,993.
Source: Ambito
