Food: On every purchase receipt, almost half of what you paid is tax

The news this week was that the govt open imports to certain products in the basic basket, including foods such as bananas, potatoes, pork, coffee, tuna and cocoa products. News that was welcomed with certainty critics from local producers, grouped in Copal. Basically the emphasis was on tax advantages which will be granted to importers, such as the suspension, for a period of 120 days, of the collection of additional VAT and income tax on imports of these products.

On this point, Copal’s thesis was, in summary, this extend tax breaks to local producers too.

The tax burden and its impact on the final prices paid by consumers is a constant complaint and comes from afar. It regains strength thanks to this window that opens to imports and because in the future the expected greater economic opening will put tension on the relationship between local production and imported products. Companies support it, quite logically the opening is accompanied by a tax reductionbecause otherwise it will be impossible for them to compete against the feared “wave of imports”.

The Minister of Economy Luis Caputo he touched on the topic tangentially this week, when he spoke at the annual meeting organized by Amcham: “First we need to achieve fiscal balance, then grow and finally lower taxes.”

In any case, the tax pressure on food products is a central element understand why foods have the prices they have and the impact on the most neglected sectors, which allocate a large part of their income to food spending. Today the basic basket has reached the value of 690,000 dollars. In that value there is $302,000 which is taxes.

A report prepared at the request of Clarion for him Argentine Institute of Fiscal Analysis (IARAF)established that in a list of nine basic products of the food basket, 43.9% of what the consumer pays are taxes and duties that go to the coffers of the Municipalities, the Provinces or the national State. AS, For a $50,064 purchase receipt, taxes represent no less than $21,994.

In a similar report, drawn up in January 2020, it emerged that taxes occupied 41% of the same basket. The increase of almost three points may be due, on the one hand, to the fact that the prices of each product have varied to a different extent, or also to some adjustments in the percentages of municipal rates or provincial tax rates.

The levels of provincial rates and taxes – those that exist or those that may be created – will be an issue to follow closely from now on. It happens that from the official decision of step on the so-called discretionary transfers to the provincesmany governors and mayors may be tempted – and are already doing so – to increase tariffs or create new taxes or fees to thus compensate for the resources that the National Treasury stops transferring to them.

The price, with and without taxes

The report prepared by the IARAF, led by the Cordobese economist Nadín Argañaraz, underlines that “in Argentina, mass consumption food products that pass through an industrial production process and a commercial distribution chain, incorporate the remuneration of inputs into their price , workforce and company profitability; as well as taxes from different levels of government.”

The basket prepared for this article details the tax burden at its different levels.

The taxes considered at national level are: VAT, profits, allowances duty, internal taxes and social security charges; At the provincial level, the tax on Gross Income and at the municipal level Inspection rate, safety and hygiene.

The report also highlights that different categories of goods can be distinguished based on the tax rates that affect them differentially, which determine different levels of tax burden. In this way, two categories of food can be grouped based on the VAT that taxes them, and two types of drinks taking into account the different rates of internal taxes. Depending on the type of products, the tax burden can vary between 36 and 48%.

In the IARAF report, for example, you can see the weight of taxes on the following products.

• If the consumer buys One kilogram of flouryou’ll pay $305 pesos in taxes on an $845 ticket.

• In case of a bottle of sunflower seed oilpays $1,150, of which $480 is tax.

• In a pack of half a kilo of ricethere are $747 pesos in taxes on a $1,790 purchase.

In the original text of the invitation Omnibus law It is envisaged that when a registered manager or a single tax expert carries out sales, rentals or supplies of taxable services to final consumers, “he must discriminate in the invoice or equivalent document the tax which is borne by the operation”.

Regardless of whether the consumer has the details of what he is paying in taxes, it is It is also crucial that the company’s purchasing power improves substantially.