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 contributionsareamongtheleviesinlineforrelief. Yetinaccordance 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.