A wealthy household receives 64% more pesos as a subsidy than a poor electricity and gas payment

In May 2021, i.e. a year ago, Economy Minister Martín Guzmán indicated for the first time that subsidies would have to end because of their nature. “Rich”. He said: “In a country with 57% child povertywe are spending to subsidize the consumption of electricity and gas in a part of our population that now is not a priority to receive these subsidies, neighborhoods where they live high -income peoplewhen those resources need to be used for those most in need ”.

Last Monday he insisted, but this time responded by raising Vice President Cristina Kirchner: “It’s a wonder in which country in the world it has worked, to deliver a path of development with social inclusion , have energy subsidies for 3 or 4 Product points ”.

Not that the minister makes a discovery. Since the first government of Cristina Kirchner this has been discussed distortion with high financial impact. In those days, it was criticized that subsidized natural gas was used, for example, to heat pools in private neighborhoods. But this week, at a public hearing, the undersecretary of Energy Planning, Andres López Osornio, He put official numbers into the discussion.

The officer showed a photo in which he clearly showed the inequality caused by subsidies on electricity and gas bills through networks.

Data from the Ministry of Economy, referring to what happened in 2021, says this: a household in decile 1 – the one with the lowest income – received year -round subsidies for $ 31,817 peso service fee electricity. At the other end, a household in the 10th decile – where the richest household is received from the State $ 49,452. The nonsense is seen: the richest household received 55% more state assistance than the poorest household.

For the case of natural gas the inequality is even greater. One household in the decile with the lowest income received state assistance last year for $ 12,649. One household at the top of the income pyramid received $ 23,312 floor. In this case, the difference in favor of the richest household is 84%.

In other words, between electricity and gas, the rich household received 64% peso than the poorest household.

Another way to visualize inequality is to look at what percentage of a household’s income is used to pay for electricity and natural gas services.

As reported by the Ministry of Economy, based on data from the Permanent Household Survey (EPH) of INDEC, the situation in 2021 is as follows: the household in the poorest decile received electricity subsidies for equal to 15.4% of your income. In the case of gas, the subsidies are equal to 6.14% of revenue of said home. On the other extreme, subsidies for electricity and gas are equal to 1.5% and 0.72% of the income of a high -income household.

It is now estimated that consumers pay only 25% of the electricity or gas bill. The remaining money is provided by the State. The proportion paid by users is very similar to the current proportion at the end of Cristina Kirchner’s second term. The increases applied by the Mauricio Macri government until the end of 2018 have brought the proportion of charges paid by users to 75%, especially by the wealthiest households.

López Osornio’s report explains why subsidies are being removed from the wealthiest households not too much affect your standard of living. “Another aspect obtained from this analysis is the low coverage of natural gas and electricity services within the total expenditure of high -income households. For example, In the decile with the highest revenue, 0.9% of revenue is allocated to electricity consumption and 2.2% to natural gas consumption. The fact that the scope of the subsidy is in the upper deciles suggests the possibility to reduce the amount without negatively affecting the ability to pay or the welfare of these sectors ”.

These explanations are both true and obvious. Therefore, the resistance experienced by the economic group in advancing the elimination of subsidies is doubly noticeable. In fact, what was announced as a haircut today has become a gradual decline.

In other words, the Government chose — perhaps forcing the resistance of officials to respond to the Patria Institute — for gradualism, despite the fact that spending on energy subsidies puts the highest pressure on the Central bank’s meager dollar reserves. .

To clarify the problem, López Osornio underlined: “ Ang integration errors in energy subsidy policy deteriorate the effectiveness of public spending and the quality of its effects. In addition, they cause distortions and external negatives to the energy sector, such as excessive consumption of a resource that is not considered scarce. ”