Argentina’s Economy Minister, Luis Caputo, has announced a significant reduction in the ‘Impuesto PAÍS’ levy on imports, signaling a major shift in the country’s economic policy. Effective from Monday, September 2, the import tax will be slashed from 17.5% to 7.5%. The reduction, however, will not extend to the purchase of U.S. dollars for savings or expenditures on tourism abroad.
Caputo’s announcement was made via his social media account, where he declared the reduction a “promise kept.” The decision counters recent speculation that the tax cut might be delayed, reaffirming the government’s commitment to easing the burden on importers.
This move is seen as a strategic effort to boost trade and ease the cost pressures on businesses reliant on imported goods and freight. The reduction in the tax is expected to provide relief to industries struggling with high costs, potentially revitalizing economic activity in key sectors.
However, the tax cut comes with significant implications for government revenue. The ‘Impuesto PAÍS’ has been a substantial source of income, generating 4.2 trillion pesos in the first seven months of this year alone. According to estimates by the Instituto Argentino de Análisis Fiscal (IARAF), the reduction could cost the government between 730 billion and 1 trillion pesos by year’s end, equating to 0.13% to 0.18% of GDP.
Despite the anticipated drop in revenue, Caputo assured that the fiscal impact would be mitigated by increased income tax revenue, keeping the government’s budget balanced. The announcement also aligns with President Javier Milei’s plan to completely eliminate the tax by 2025, as outlined in the upcoming budget proposal.
In the short term, the reduction of the ‘Impuesto PAÍS’ is expected to provide a much-needed boost to Argentina’s economy by lowering import costs, though the long-term fiscal implications remain closely watched.
