Argentinian winemakers are campaigning against an 8% export tax they say will damage the country’s already “uncompetitive” market.
Business chamber Bodegas de Argentina yesterday (11 January) expressed its “deep concern” on X (formerly known as Twitter) over proposed tax increases by the country’s newly elected president, Javier Milei.
It said increased export and import taxes would damage sales through decreasing competitiveness, see jobs cut, increase the cost of raw materials and also hit wine tourism.
Winemakers said the industry was already suffering due to “low competitiveness”, with a “historic” drop in exports in 2022 of 27% in volume and 17% in value.
It follows relief shortly after the election in December, when the government announced it would devalue the peso – which some felt could have made Argentinian wine more attractive to prospective importers.
The government said it planned to devalue the peso by over 50% to 800 pesos per US dollar, as well as cutting public spending, in an attempt to steady the country’s economy.
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Bodegas de Argentina said this generated “a competitive improvement of 20% with respect to the system in force prior to the elections… [but] this improvement drops to 12% with the application of the 8% withholdings announced during the [following] week”.
It said the proposed taxes would reap around $60m for the government. In a statement released in December, Bodegas de Argentina said: “This is a low impact sum for the national coffers, but it is close to the amount that wineries spend on promotion and advertising actions in the markets in which they are present.”
Bodegas de Argentina is a group of over 250 Argentinian wineries and suppliers.
The South American country has approximately 17,000 “primary” producers, 900 wineries and 500 exporters and suppliers and exports to over 150 countries. Bodegas de Argentina estimates the Argentine wine industry creates around 450,000 jobs “directly and indirectly”.
This week, Argentine authorities met with the International Monetary Fund to discuss its financial assistance.
An IMF spokesperson said: “The new administration is already implementing an ambitious stabilisation plan, anchored on a large upfront fiscal consolidation, along with actions to rebuild reserves, correct relative price misalignments, strengthen the central bank’s balance sheet, and create a simpler, rules-based, and market-oriented economy.
“It also envisages the scaling-up of social assistance to protect the most vulnerable.”