BUENOS AIRES – The Argentine government on Monday made official a 60 to 75 percent tax hike on the manufacture of tobacco products via the publication of a decree in the Official Bulletin.
The funds collected with the tax increase will allow the diversion of additional money to the provinces and greater coverage of expenses by the health system associated with fighting tobacco-related illnesses.
On the other hand, the government of Mauricio Macri decided to maintain the emergency surcharge on sales of cigarettes at 7 percent.
The government, in fact, is preparing a bill to definitively eliminate the surcharge in exchange for an increase in the share of taxes on production.
The increase had been announced by the Finance Ministry last Friday and was rejected by cigarette producers, who warn that the measure will translate into a price hike at the retail level that will increase the inflation already burdening the Argentine economy.
“The sharp increase in fiscal pressure decided upon by the government will create an inevitable increase in prices that will affect the volume of sales and will have a negative impact on inflation, the level of activity in the producing provinces and on the entire economic value chain,” said the Tobacco Industry Chamber in a statement distributed Monday by the official Telam news agency.
Consumers consulted by EFE said that already by Sunday the price of a pack of 20 cigarettes had jumped from about 29 pesos ($2) to 43 pesos (almost $3).