Argentina will debate tax-raising emergency economic bill

Argentina’s government will send a bill to Congress on Tuesday that includes an array of proposals to increase taxes, including on overseas transactions and personal property, as new President Alberto Fernandez seeks funds to save a stalled economy.

A spokesman for new cabinet chief Santiago Cafiero confirmed the plan to send the bill to legislators, which is expected to give the government ammunition to bolster social spending amid recession and rising poverty.

Fernandez’s administration has already announced plans to increase taxes on farm products, Argentina’s main export, and to bring back a so-called “tourist tax” on overseas expenditure. It will also cut drug prices in agreement with industry.

When Fernandez took office last week after beating conservative Mauricio Macri in an October ballot, he came face to face with staggering annual inflation of almost 55 percent and an economy that is expected to contract for a third straight year in 2020.

The centre-left president said in an interview with local television channel Telefe on Monday that utilities prices would be frozen until June 30 next year. Price hikes for power and transport had stoked inflation and rising social anger under Macri.

Fernandez’s policies are focused on economic growth, in contrast to the austerity measures that made his predecessor unpopular. The new president said his government planned to make payments to retirees and anti-poverty subsidies by the end of the year.

His economic team is also already negotiating with the International Monetary Fund (IMF) and other creditors on new payment terms on about $100bn in debt, which Fernandez said Argentina cannot currently pay.

Newly appointed economic chief Martin Guzman said previously he would not reduce fiscal spending and Argentina would have to grow its way out of its “virtual default” situation using production-oriented policies instead.

“The year 2020 is not a year in which fiscal adjustment can be made. A larger fiscal contraction would deepen the recession and aggravate the problem,” Guzman said a week ago in his first news conference since taking office.