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10 de setembro de 2009Multinational electronics manufacturers have launched a lobbying push to halt a bill in Argentina’s Senate that would double the value-added tax on cellphones, televisions and cameras.
The increase, which was approved by the lower house of Congress in August, was proposed by leftist President Cristina Kirchner to boost flagging government revenue and stimulate local manufacturing and job growth.
The so-called impuestazo, or big tax, would double to 21% the value-added tax on most electronics goods not produced in the Tierra del Fuego special economic zone.
Mrs. Kirchner says the tax would mean “fewer dollars that leave the country to pay for imports and more jobs for all Argentines.”
Since taking office in December of 2007, Mrs. Kirchner has shown herself to be ideologically committed to nationalist economic policies, raising trade barriers and seizing control of private pension funds and the largest airline.
An effort to bring the measure to a vote on Sept. 2 failed when the administration lacked a quorum of senators, partly because a handful of pro-Kirchner legislators were out sick. The Senate leadership has said the bill is a priority, but it isn’t clear when it will be brought to the floor.
The Chamber of Information Technology and Communication, which represents many multinational companies in Argentina, says the tax proposal would boost prices for products like computer monitors and cellphones by as much as 34% and would make Argentina’s economy less competitive by limiting access to technology.
“Obviously prices will rise for our product lines,” said Juan Hernan de Carlo, marketing coordinator in Argentina for Canon Inc. of Japan, which sells cameras, video cameras and printers here. “This will surely harm our business.”
The Argentine Chamber of Office and Commercial Machines and the Argentine Association of Cable Television have also been lobbying against the proposal.
High taxes and transport costs already make electronics products more expensive in Argentina than they are in most of the rest of Latin America. Facebook groups have formed to protest the tax increase, and Argentine hackers recently posted a manifesto on several government Web sites assailing the proposal as “retrograde and infantile.”
Argentina began offering tax incentives to electronics companies establishing operations in Tierra del Fuego in the 1970s to spur development in the isolated southern archipelago. Today, operations there remain modest.
Argentine-based manufacturers as a whole account for only about $300 million of Argentina’s approximately $4 billion market in telecommunications and computer goods, according to a study by academics from Columbia University and Argentina’s San Andres University.
“When the Argentine government raises taxes on technology to benefit a few silly assembly factories, it shows that it doesn’t understand the modern world or Argentina’s role in it,” says Julian Gallo, an Argentine technology consultant.
Last year, Argentines bought 10 million cellphones, spending about $1 billion, said Enrique Carrier, a Buenos Aires technology analyst. Only about 2% were made in Argentina, while roughly 65% were imported from Brazil and 20% from Mexico, according to the Chamber of Information Technology.
Multinational phone makers such as Nokia Corp., Motorola Inc. and Sony Ericsson could see sales damped by the tax increase, analysts say.
Political analyst Carlos Germano says the tax increase, in part, represents the government’s return of a political favor to two opposition senators from Tierra del Fuego. Earlier, the two senators broke ranks with their party to vote with the government on a measure to renew Mrs. Kirchner’s special powers to control budget allocations. The government says it isn’t pursuing the tax increase to repay a political debt.
