Headline: Argentina Bids Farewell to Impuesto PAIS: Challenges and Replacements Ahead
After contributing approximately USD 17.3 billion since its inception five years ago, the Impuesto PAIS has finally expired. Introduced in the first batch of laws presented to Congress by then President Alberto Fernández, this tax was designed to be temporary but, as is common with many such taxes in Argentina, its expiration was far from certain.
The province of Córdoba, under Governor Martín Llaryora’s helm, advocated for the tax’s permanence, arguing that it should be made permanent and shared among all provinces. However, the government, with a keen focus on lowering inflation, categorically refused, leading to the tax’s eventual expiration.
The elimination of Impuesto PAIS is expected to reduce the cost of imports, potentially helping to maintain monthly inflation rates around 2% or even lower in the coming months. However, the question left unanswered is: where will the replacement revenue come from?
Nadín Argañaraz, director of the Instituto Argentino para el Análisis Fiscal (IARAF), reveals that the impuesto arrived as the nation’s highest revenue-generating tax, contributing more than USD 17 billion and equivalent to 3% of the GDP over its five-year span. With such lofty revenue figures, replacing this significant income poses a formidable fiscal challenge for 2025.
Despite the impuesto’s expiration, the government aims to increase real tax pressure by 0.55 percentage points of GDP in 2025, driven primarily by increases in fuel taxes (0.34%), export rights (0.47%), and social security contributions (0.5%).
While the impuesto PAIS’s expiration projects a 1.1% GDP decline in tax pressure, the expected increase in other taxes should more than compensate for the loss. According to the government’s budget projections, the total tax pressure is set to rise to 22.9% of GDP in 2025. However, with changing economic dynamics and political winds, this forecast may be subject to revision.
