Government announces new tax hikes, sends 'emergency bill' to Congress
Economy Minister Martín Guzmán confirms trailed measures designed to boost growth, including higher export levies, 30% tax on foreign currency purchases, freeze on public utility prices, and bonus for pensioners
President Alberto Fernández's government unveiled a series of pre-trailed measures designed to boost growth Tuesday, beginning with a 30 percent tax on foreign currency purchases and a six-month freeze on public utility prices.
The new government is proposing higher export levies and a tax on the purchase of foreign currency, as part of a plan to boost social spending and fix its debt problem.
Fernández, who took office last week, had already announced increases in taxes on agricultural exports over the weekend.
The measures announced by Economy Minister Martín Guzmán on Tuesday is aimed at boosting spending with a focus on social programmes in the hope of reviving domestic consumption and restricting dollar outflows.
Fernández on Tuesday sent a so-called "emergency bill" to Congress, where his Frente de Todos coalition will face its first test. He seeks to obtain sweeping powers to renegotiate debt, raise salaries and taxes, while controlling prices of politically-sensitive items such as utilities and medication. In addition, the bill would raise export tariffs on the agricultural sector.
It follows recent government decrees for temporarily doubling severance pay and lowering medication prices.
The minister added Tuesday that, in order to put public debt on a sustainable path, the government first needs to “determine a sequence of primary fiscal and trade results that are consistent with a recovering economy.”
Argentina's economy is expected to shrink by around 3.1 percent in 2019, as inflation hovers around 55 percent, poverty near 40 percent and unemployment rising to 10.5 percent.
"We want to have a good relationship with the IMF but without growth we won't be able to pay," said Fernández, accusing Macri of leaving the country in "virtual default" following 18 months of economic turmoil triggered by a currency crisis.