Government announces VAT refunds for basic goods

The measure, which comes mid-electoral campaign, is an attempt to compensate for the highest inflation rate in 32 years

Sergio Massa speaks at his Frente Renovador party congress. Credit: Télam

The government will start refunding value-added tax (VAT) on basic goods for many workers and welfare recipients, Economy Minister Sergio Massa announced on Wednesday evening.

The program, called “Buy without VAT”, will apply to products within the basic basket of goods, purchased via debit card. It will be capped at AR$18,800 (US$53.70 at the official rate, US$27.80 at the MEP rate) per month.

“It is focused on foods, drinks, fruits, vegetables, meat, and hygiene products,” said Massa, who is also the ruling Unión por la Patria coalition’s presidential candidate, in a recorded message. “Its goal is that the basic basket is covered and compensated by this benefit.”

In Argentina, VAT is 21%.

Those eligible for the benefit include monotributistas (unified tax-paying workers, a category that encompasses freelancers and informal economy workers), retirees, formally employed workers earning up to AR$708,000 per month, people receiving Universal Instalment per Child welfare payments, and domestic workers.

On Monday, Massa announced that the Argentine government will raise the income tax threshold to AR$1.7 million pesos per month from October.

The refunds will be paid into recipients’ accounts automatically within 48 hours and they will not need to complete any paperwork to receive it, according to Massa. He said the goal is to address the “the blow and the injury” provoked by the 22% devaluation the government implemented one month ago, sending inflation soaring. 

The minister stressed that the peso depreciation was imposed by the International Monetary Fund (IMF).

August’s inflation rate, announced just three hours beforehand, was 12.4%. The figure represents the highest monthly rate since February 1991, when the country was mired in a hyperinflation crisis.

“It is the most progressive measure we can take in terms of taxation,” Massa said.

The minister also announced two additional measures — credit of up to AR$400,000 for formal workers at a preferential 50% rate and the extension of a food program for the elderly to 2.9 million beneficiaries.


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