In the midst of uncertainty about a possible new increase in fuel prices, what was expected happened: motorists gathered in long lines in front of the pumps. from service stations to fill their tanks.
It happens that this Wednesday at midnight extension expires which applied the management of Alberto Fernandez to the tax on liquid fuel (ICL) and carbon dioxide (IDC). Therefore, it is calculated that if the extension is rejected, The impact on consumer prices will be between 10% and 11%. In that case, the liter of Super gasoline would go from $699 to $775while the value of the premium would rise from $862 to $956. Always taking the values seen in the city of Buenos Aires.
This tax burden was last updated during the second quarter of 2021 with the aim of preventing prices from skyrocketing. As a counterpart, the Government demanded that the oil companies increase prices below the Consumer Price Index (CPI).
Then, in November of last year, the then Minister of Economy Sergio Massa again postponed the transfer of the tax to the pumps under the argument that “in the case of consumption taxes, and given that the demand for liquid fuels is highly inelastic, the “Variations in taxes are transferred practically directly to the final fuel prices.”
Given the imminent extension, on February 1, The rumor of the price increase mobilized motorists to the service stations. However, there was still no official confirmation about the price change.
Due to the failure to update the tax, the treasury stopped collecting, it is estimated, some US$3.6 billion since 2021. A figure takes on a special dimension at times of arduous negotiations with the opposition that Congress managed to reverse the fiscal chapter of the Omnibus law. The oil companies discount that they will be able to pass the tax on to consumer prices without even waiting for the Government to publish the measure in the Official Gazette. In one of the oil companies they estimated that a liter of diesel and gasoline could increase between $62 and $91.50 respectively.
But they also assume that – after two and a half years – they will not be able to move it all at once. Especially at this time, when – due to drastic increases – demand is falling. In January alone, sales fell 20%, according to estimates by CECHA, the Confederation of Hydrocarbon and Related Marketing Entities.
Estimates of the impact that the application of the tax may have differ according to different sources. For example, for economist Nadin Argañaraz, director of the Argentine Institute of Fiscal Analysis (IARAF), the increase in prices would be 25%.
That would mean bringing the fixed sum to about $175 per liter.. In official dollars it would go from US$0.95 to US$1.2. For the Nation it could imply extra resources for 0.37% of GDP and for provinces for 0.15% of GDP.
This tax, according to an IARAF report, “has the character of co-participating, therefore, it affects the income of the Nation and provinces plus CABA.”
Using the province of Cordoba as an example, the economist pointed out that “the weight of each tax on the final value of super gasoline in the city of Córdoba, it is observed that the tax burden is currently 24%. If updated fully due to inflation the value of the tax, the total tax burden on the final price of gasoline would be 39%,” he estimated.