Photo via Infobae

The government decided to stop reimbursing the IVA tax on debit card purchases lower than AR $1,000 today. Even though consumption is still not showing signs of recovery and a large portion of the economy is still depending on physical cash transactions, voices from within the Treasury Ministry assured the public that the decision was made because the measure didn’t fulfill its goal to boost consumption and bring more people into the formal economy. “It had an extremely high fiscal cost and didn’t reach its goal of encouraging card use,” sources from the ministry told Clarín.

The government estimates that it was prevented from collecting AR $6 billion in taxes last year as a result of the policy. In an interview with Infobae, the newly-appointed Treasury Ministry, Nicolás Dujovne, said those who need the help the most will continue to have it: “It benefited a single sector of society that doesn’t need it. And we must consider the support of retirees who collect minimum pension, Universal Child Allowance (AUH) and Pregnancy Allowance recipients, who will still have the IVA tax deducted from their purchases with debit card until December 31st. That’s our goal. To reimburse the IVA tax to those who need it the most.”

The measure was put in place during 2001, shortly before Fernando de la Rúa’s administration collapsed, and was extended year after year. When taking office, the Cambiemos government made it clear it was considering eliminating it, and planned on extending it for four months initially, but with the economy dropping in April, they decided to keep the policy in place until December.