Sapa-AFP Buenos Aires
Argentina’s government would slap stiff tax increases on luxury cars, boats and planes, in its latest bid to staunch a flight of hard currency, it said on Friday.
“We will send a bill to congress to modify the tax code, with the goal of increasing taxes on luxury cars, boats and tourist planes,” said President Christina Kirchner’s new chief of staff, Jorge Capitanich.
The goal was to “discourage extravagant consumption”, which Capitanich said did not contribute to the overall productivity of the nation.
The measure is the latest in a series of government moves aimed at curbing inflation, which could exceed 30 percent this year, and stemming a drop in its hard currency reserves.
Sales of luxury cars – almost all of which are imports – have exploded this year in Argentina, as the rich have taken advantage of favourable exchange rates to acquire top car brands like Mercedes, Audi and Land Rover, among others.
At official exchange rates, one dollar is worth six Argentine pesos, but on the black market one can get as many as 10. Central bank reserves in Argentina are on the brink of falling below $32 billion (R322bn) – a huge decline from $52bn just three years ago.
Inflation is also seen as a huge problem. Earlier this year, Buenos Aires imposed a price freeze on Argentina’s largest retailers, but that measure was by and large unsuccessful in preventing consumer prices from spiralling upwards.
Capitanich also announced on Friday that Kirchner had named Augusto Costa to be the country’s new minister of commerce.