2024-03-13 19:20:00
On Tuesday, March 12, Economy announced that there will be better financial and tax conditions for imports of food and other goods in the basic basket. As Minister Luis Caputo had been warning for a few days and following his meetings with supermarket leaders, the Minister of Economy clarified that There are values that were out of date in dollars and that will bet on imports to balance them.
The government’s objective remains firm in the fight to lower inflation and they do not fail to remember it in every interview they offer. By case, Walter Morales of Wise Capital remember in his analysis today that Caputo has also been highlighting that “When free currency competition is established, a shock will be generated that might cause inflation to collapse.“.
Cavallo said that the private sector has to collaborate with the Government to lower inflation: “There were exaggerated increases”
Since prices are not following the drop that they believe products on shelves should have, the government takes this step of opening imports to certain products in the basic basket, in reality, making the entry of products more flexible. For this purpose, it was decided that the BCRA would reduce the payment period for imports of food, beverages and cleaning, care and personal hygiene products.
In this way, they will now go from a payment scheme in four installments at 30, 60, 90 and 120 days to a payment term in a single installment at 30 days. Likewise, it was decided to suspend the collection of additional perceptions of Value Added Tax (VAT) and Profits for a period of 120 days.
But the criticism did not wait. For example, the Argentine Industrial Union (UIA) warned regarding what they consider unequal treatment. “While national producers must pay in 4 monthly installments and with PAIS 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 pointed out from the industrial plant that leads Daniel Funes from Rioja.
The view of economists
For the economist Carlos Rodríguez, the former ally of Javier Milei who now severely criticizes him on networks, explained in a recent tweet that Argentina’s problem is not only tax in nature and for that he appealed to a concrete example of a productive good. Korean and the value it has in Argentina and the United States, in order to show that not all of them are taxes.
“A Korean LG refrigerator is worth 10 times what it is in the USA in CABA. In both cases it is imported from Korea. The maximum tariff in Arg. is 35% and VAT is 21%. That gives a differential of 63%. But the difference is 900%. They are NOT TARIFFS and NOT VAT. There are other things…that we don’t know. It’s not enough to say that the seller is a jerk. The Secretary of Commerce (I think it still exists) might enlighten us, otherwise open the serious economy to the reverend…”, he indicated.
A Korean LG refrigerator is worth 10 times what it is in the USA in CABA. In both cases it is imported from Korea. The maximum tariff in Arg. is 35% and VAT is 21%. That gives a differential of 63%. But the difference is 900%. It is NOT TARIFFS and it is NOT VAT. There are other things…that don’t…
— Carlos Rodriguez (@carod2015) March 12, 2024
For the economist Manuel Cerdan, consulting analyst Inveqthe measure announced by Manuel Adorni yesterday morning will have a “marginal impact in the short term.”
According to the analyst ““may affect the sector’s price level somewhat, but the inflationary dynamics of the coming months will mainly depend on other things,” and among them he listed: “Firsthow the realignment of relative prices continues (salaries, rates, services, dollar), and second, what is done in exchange matters (when and how it is unified; crawling is accelerated or they make another discrete devaluation)”.
The government opens the import of products from the family basket to stop the rise in prices
In any case, the Inveq analyst pHe added that it might have a positive and faster impact for families. “In any case, from the consumer’s point of view, it is beneficial while it will offer a greater offer and/or variety of productsin addition to the fact that there might eventually be lower prices.
Something similar regarding the expansion of the offer he pointed Eugenio Mari, Chief Economist of the Freedom and Progress Foundation: “The opening of the economy“a implies greater competition, and that benefits consumers with more variety and lower prices.”
However, in his analysis Marí also added to the productive leg. “It also benefits producers, since we must not forget that almost 80% of imports are productive inputs. For many years Argentina maintained a closed economy model, where importing required authorization from the State, which regulated who imported and how much. Obviously this generated incentives for corruption, but it also restricted supply in the markets and harmed consumers and producers. It was enough to go to the supermarket and compare with the shelves in other countries to realize that something was happening,” said the economist.
And he detailed that Through the DNU, the government ended non-automatic import licenses and prohibited quantitative restrictions on imports, which he described as “a great advance for a country that has been moving with this type of restrictions since 2002.”
Aldo Abram on the opening of imports: “They are going to have to lower prices”
For Mari These discretionary obstacles were the thickest in terms of trade protectionism, but not the only thing. “Still There remains a tangle of taxes that make imported products more expensive and restrict competition in our market. There are products from the basic basket of the 21st century that have up to 35% tariff, COUNTRY tax of 17.5% and statistical rate of 3%. As the fiscal result increases, it is essential to eliminate these taxes to become a more competitive economy and relieve consumers’ pockets,” he indicated.
Finally, Marí also referred to the rest of the production chain and not just the final goods. “We must not forget that these same taxes fallin many cases, on the inputs used by Argentine companies, So they must buy them at a higher price. TO “When it comes to moving forward in economic opening, we must not only move forward in lowering import taxes on final products, but also on inputs to precisely alleviate this situation for producers,” said.
The benefits to imports demonstrate the failure of the pricing policy
For his part, the economist Pablo Challu was categorical in his analysis and pointed out that the benefits to imports demonstrate the failure of the pricing policy: “They say that one example is more powerful than a thousand theories. If we take into account what is happening today with the pricing policy in the Argentine economy, it demonstrates the wisdom of that saying.”
The former secretary of internal trade assured that: “the measure to further release or facilitate imports of food and medicine, indicate the failure of the policy tried by the Government in this regard, cin the hope that with competition they will neutralize any price increase that does not correspond to costs; “A fact that, in reality, is not manifesting itself, as the Government itself recognizes with this unrestricted opening of imports.”
“But it not only indicates the failure of the policy of unrestricted and absolute freedom of prices – continued the economic reference of Principles and Values – but also the imbalances that are occurring in economic policy in general. Why “Nothing justifies opening the economy, even giving extraordinary tax benefits to importers in two of the most competitive sectors of the national economy,” mentioned.
“Evidently “The pricing policy has entered into crisis, which also indicates, in a more profound way, the crisis of the economy in general,” Challú finished.
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