The project of The labor reform that the Executive Branch has submitted to Congress for consideration includes a tax change that caused a big surprise. One article suggests Abolition of domestic vehicle taxa measure that companies in the sector had been waiting for for several years and which, if the project was approved, would have a direct impact on vehicle prices.
Abolishing the tax would allow progress on what is said to be one of the most distortive and unequal taxes affecting the price of 0km cars: the famous one “Luxury tax.”
Although the automobile terminals are grouped together in the Association of Automobile Factories (Adefa) You worked with him Ministry of Economic Affairs in a reduction agenda tax burden This can reduce the prices of vehicles on the domestic market and improve export competitiveness (abolition of the Export duty is the proposal), this inclusion in the labor reform project caused surprise.
The impact of internal tax
The internal tax has two scales, one of 20% and one of 35%. The first was suspended in January this year and the second already was reduced the rate to 18%. Because it is a tax imposed in addition to another tax, the actual impact of Scale 2 is close to 22%.
Although the tax currently This applies to cars priced over $103,000,000Reality shows that there is practically a “gap” without cars due to the tax.
Prefer those who are just above give up profits but sell cars, then they set the prices just below the limit. On the other hand, those that cannot sink because they cost almost $110,000,000, you automatically pay 22% more, which increases the price up to $134,000,000.
This tax does not apply to light commercial vehicleswhich is why it only applies to Sedans, hatchbacks and SUV carsbut not on pick-ups, panel vans and delivery trucks.
Alberto MastandreaBDO Tax Partner in Argentina commented to PERFIL: “Internal taxes pay homage to the selective consumption of goods, which in the past had a dual purpose.. On the one hand, the tax system should be made progressive by imposing a higher tax burden on those who demonstrate higher tax capacity, through the taxation of goods typically associated with luxury consumption. On the other hand, the consumption of certain products that are considered harmful to health should be prevented and their final price should be increased, as is the case with tobacco or alcoholic beverages.”
“This occasion is exclusively about abolishing those internal taxes whose purpose of existence is linked to the pursuit of progressiveness of the system and maintaining those taxes whose basis is linked to the protection of public health. It is therefore a selective abolition of the tax“Mastandrea added.
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The tax specialist assured that “the project eliminates tax on various items, including insurance, mobile and satellite phone services, luxury goods and.” Motor vehicles and enginesand recreational or sport boats and aircraft with discounts Range between 5% and 25%depending on the product or service in question”.
“Since it is a tax that falls directly on consumption, its repeal should, at least in theory, This leads to a reduction in the final price of the goods obtainedto the extent that the tax was passed on to the consumer,” Mastandrea added.
“In short, although it is a tax reduction, it should be noted The state is currently not making any significant efforts regarding the survey. Although the internal taxes achieved significantly distort the price of the goods taxed, they do not represent a significant source of fiscal resources. Yet, The measure can be seen as a first step towards the goal of starting to make the excise tax structure more flexible.with a direct impact on prices and signals relevant to economic activity,” he concluded.
Waterfall effect
Just like at the beginning of the year when the application of the first season was suspended, the abolition of the second season will lead to a drop in prices not only in the year Cars that cost more than $120,000,000 today and could cost $100,000,000but also those that had a price tag of almost 95 million pesos because they will be expensive compared to those in the immediately higher range.
As an official importer of Hyundai and without knowing that the government planned to propose this measure in the reform that it will submit to Congress, Cavicchioli was the first businessman to decide this month to reduce the profit margin but to take advantage of the profit margin Update of the tariff created by ARCA With its arrival in December, the price of the SUV will be reduced Hyundai Santa Fe, which went from $79,000 to the current $70,900.
“Plus, a car is more expensive than it should be You pay more insurance, more patents, more initial registration. The customer will also benefit from this. It is beneficial for everyone. The state does stop the survey, but it is very little, and as more and more cars from these segments are added You will collect more for the 35% import duty of what they will no longer receive from the tax that they are abolishing,” he concluded.
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