He Government has decided not to replace the PAIS tax, which means that from January 2024 it will be cheaper to spend in dollars with a credit card. This measure has generated various reactions and expectations in different sectors of the economy and society.
The PAIS tax (Tax for an Inclusive and Solidarity Argentina) was implemented in December 2019 by the Government as part of a package of economic measures aimed at stabilizing the economy and increasing tax collection.
This 30% tax was applied to the purchase of foreign currency for savings, credit and debit card payments abroad, and other expenses in foreign currency. Over time, other surcharges were added, such as the Income Tax and the Personal Property Tax, which raised the cost of consumption in dollars.
However, the Government has decided not to renew this tax, which expires at the end of the year, and not to implement new surcharges to compensate for its elimination. This decision is based on several factors, including the sustained decline in parallel dollars (such as the MEP dollar and the cash settlement dollar), which has reduced the need to maintain a high exchange rate for tourism and consumption abroad.
The elimination of the PAIS tax and the reduction of costs associated with the use of dollars with a credit card will have a significant impact on consumption and tourism. This measure is expected to promote an increase in trips abroad, since Argentines will be able to spend in dollars at a lower cost.
This could benefit the tourism industry, which has been hit hard by the pandemic and economic restrictions. In addition, other sectors such as streaming services and online shopping on international sites could also see an increase in demand.
Result
With a cheaper card dollar, consumers will be more willing to subscribe to foreign services and make purchases in online stores outside the country. One of the main challenges facing the Government With this measure is the impact on the Central Bank’s reserves.
The elimination of the PAIS tax could increase demand for dollars, which could put pressure on international reserves. However, authorities are confident that the downward trend in parallel dollars and exchange stability will help mitigate this effect.
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