Argentines are flocking to Chilean shopping centers in search of lower prices, causing companies in Argentine provinces near Chile to go out of business.
According to the Economic Observatory of the Association of Commerce, Industry, and Production of Neuquén (ACIPAN), due to Chilean goods being up to 60 percent less expensive than those in Argentina, Santiago has become a top destination for Argentine tourists to buy household appliances, electronics, and clothing.
Argentine expenditure in Chile grew 168 percent in 2015 and 104 percent in 2016, counting for 40 of every foreign 100 dollars spent in Chile. Last year, Argentinians spent US $836 million in Chile using credit and debit alone, not accounting for cash purchases.
“Chile has become the new Miami for Argentine consumers, as a consequence of the price difference and the better offering of products and brands,” says a Télam informant of the local Chamber of Commerce.
This spells out a severe economic crisis for Argentine areas close to the border, such as the Neuquén cities of San Martín de los Andes and Villa La Angostura. According to ACIPAN, the situation most profoundly affects mountain areas, where it has forced several stores to shut down.
“[Argentina’s] tax burden, problems with logistics, the labor cost, and lack of productivity in the country are some factors that contribute to the Argentine cost. This has compounded poverty, which leads to a lower consumer demand,” stated the Vice President of ACIPAN, Edgardo Phillips. “What is happening to us in Neuquén also occurs in trade with Paraguay and in Salta with Bolivia, for example.”
Indeed, according to a 2016 Business Insider article of the top 27 countries in the world with the highest tax rates, Argentina ranks #1 with a corporate tax rate of 137.3 percent. “The country’s turnover tax alone eats up nearly 90 percent before taxes on salaries and financial transactions are taken into account,” states the article.
The rising cost of goods in Argentina correlates to a record-high 3 million Argentinians who visited Chile last year. The Telam Agency estimates this number will increase to 3.7 million in 2017 — a 23 percent increase from 2016, and a 49 percent increase from 2015.