BUENOS AIRES-Argentina’s government is set to impose higher taxes on agricultural goods and on abroad-based foreign assets, the economy minister disclosed on Tuesday.
The government is set to implement higher export taxes on corn and wheat from 12% to 15%, Economy Minister Martin Guzman said. The “social Solidarity and Production Reactivation” plan will also hike tariffs on soybeans from 30% to 33%.
After being elected last October, President Alberto Fernandez is mandated to end inherited sharp fiscal cuts from former President, Mauricio Macri. The current President’s supporters were anticipating intensive state spending to alleviate families from low growth, poverty, and persistent inflation.
“They are taking economic measures based on who elected them, taxing farmers and high income earners in order to increase social benefits,” said Gabriel Zelpo, director of local economic consultancy Seido.
The planned tax hike came as the government reorganized $100 billion in debt commitment. Loans and bonds revamps are in urgent call to be accomplished by the end of March to maintain financial system stability.
The recent scheme which reached Congress this Tuesday is aimed at boosting social spending as the new administration struggled with persistent inflation of 55% and with the possibility of economic contraction this 2020.
In line with the latest structure of agricultural goods’ taxes, the legislation was made to implement tax on abroad-based financial assets whereas foreign currencies are to face 30% tax, Guzman said.
“All these measures are intended to be part of a comprehensive program. They are all interconnected. We are being very careful in solving all the imbalances,” Guzman said.
Country risks plummeted down to 118 points to 1,996 after Guzman publicized the project. Such indicated a positive feedback from market investors as the value of over the counter bonds acquired1.7%, according to traders.
“It is a very clear message of sending a gesture to creditors that there is a will to collect, to prevent dollars from leaving in different ways,” economist Pablo Besmedrisnik of local consultancy Invenomic said.