Buenos Aires Times

Economy in brief: tax plans, infrastructure, industry and inflation

Take a look at some of the main economic stories from the week.

Saturday 4 November, 2017
Dujovne revealed that the government is
Dujovne revealed that the government is "lloking to gradually reduce and eliminate taxes". Foto:Cedoc.

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DUJOVNE OUTLINES TAX PACKAGE

The day after President Mauricio Macri outlined the main reform objectives of his administration before a top-level audience, Treasury Minister Nicolás Dujovne presented a comprehensive tax package with far more specific proposals at a press conference on Tuesday. The package aims at reducing the current tax burden by 1.5 percent of Gross Domestic Product in the next five years – income tax (from 35 to 25 percent for the corporate sector), the cheque tax and employer social contributions are among the levies in line for relief. Yet in accordance with the need to reduce the fiscal deficit, some taxation will be increased, notably excise. The final balance for the Treasury will be slightly negative at 0.3 percent of GDP. The most striking innovation among the revenue increase proposals was an unprecedented tax on financial profits, whether from bank fixedterm deposits or state bonds like Lebacs. The rate will be 15 percent for foreign currencies and five percent for pesos with a floor of 52,000 pesos to protect  small savers. But the tax on realestate transfers is to be scrapped. Yet perhaps more public attention was most immediately drawn to a 17 percent increase on drinks of almost every kind, alcoholic and non-alcoholic alike (29 percent for strong liquors like whisky, brandy, etc.) – only soft drinks without sugar were spared with a mere four-percent increment. Beverage producers immediately responded that their prices would rise. The same percentage was also slapped on mobile telephones, television sets and entertainment electronics. Hitherto untaxed entertainment electronics like Netflix and Spotify will now be subject to the standard IVA value-added tax rate of 21 percent. Planes, luxury boats and various categories of car and motorcycle will undergo 10-20 percent increases. But excise on cigarettes will be trimmed from 75 to 70 percent.  

ECONOMISTS SEE 2017 INFLATION AT 23%

Economists this week predicted that inflation in 2017 would come in at 23 percent at the end of the year, a rise of one percentage-point on previous expectations. The conclusion, drawn from a survey of more than 50 economists conducted by the Central Bank, is above the government’s original target for the year of between 12 and 17 percent, a figure surpassed last month. The experts also predicted inflation in 2018 would come in at around 16 percent.  

SEPTEMBER INDUSTRY FIGURES UP

Industrial output rose 2.3 percent in September compared to the same month the previous year, the INDEC national statistics bureau reported this week. The bureau said that was a 1.5-percent rise for the year so far compared to the same nine months of 2016.

GOV’T SEEKS US$26B FOR INFRASTRUCTURE

Government officials told construction and finance executives this week they are seeking more than US$26 billion in infrastructure investments by 2022. Officials said they will seek to raise the funds through public-private partnerships.


 

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