Government approves fuel tax hike in October

With inflation coming in at 7% in August and the rate hike coming in from Thursday, the government decided procrastinate for the third time in the year the update of the fuel taxwhich was to be applied from 1 September.

The rise that should have occurred in the first and second quarters of the year will take place in October. The decision was adopted with decree 561/2022 published this Wednesday in the Official Gazette, with the aim of “ensure a necessary stabilization and an adequate evolution of prices “.

“When it comes to taxes on consumption, and given that the demand for liquid fuels is highly inelastic, theTax changes are practically passed on directly to prices end of fuels, indicated the decree. Gasoline and diesel prices rose 7.5% 10 days ago.

Therefore, the law provides that “in line with the measures implemented so far and in order to ensure a necessary stabilization and an adequate evolution of prices, it’s reasonable postpone the effects of the tax increase for unleaded petrol, virgin petrol and diesel ”.

Starting with a change in 2018, the Fuel Tax provides Updates on your lump sum in January, April, July and October of each year based on the changes in inflation of each previous quarter, thus trying to cushion the fluctuations in the dollar or in the price of crude oil that had previously been taken as a reference.

The rule recalls that upgrades for unleaded petrol, virgin petrol and diesel “were subsequently postponed” in 2021.

This is the sixth postponement application of the tax this year it had already been extended in February and June.

The updates corresponding to the four quarters of 2021 and all of 2022 are pending. Now, from 1 October, the adjustments for the first and second quarters of 2021 will be applied and, for On January 1st there will be updates for the second half of 2021 and for the 9 months of this year.

Increased gasoline

On August 21, YPF raised the price of its fuels and assured that it will continue to monitor the variables that drove the increase, so new adjustments are not ruled out in the near future.

The increase had a greater impact on gasoline, with an average of 8.5%, between super and premium. In diesel, meanwhile, it averages 6% between grade 2 type and grade 3.

The oil company’s last hike was last May.

Of the total increase in gasoline, according to information provided at the time by the state oil company, which controls more than 55% of the retail fuel market, about two points correspond to compensation for the increase in the price of ethanol, while the accumulated devaluation since the last petrol adjustment is 16%.

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