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Argentina Backtracks, Suspending Increased Taxes on International Flights

By | [email protected] | July 24, 2018 4:53pm

La-Voz-de-la-Provincia
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On Tuesday, the Government temporarily suspended the imposition of a series of tax hikes on international flights that originate from or land in Argentina. The measure was promoted by the Ministry of Transport, which has sought to avoid a drop in travel due to increases in ticket prices.

A series of tariff increases for flight and road support, which charge any international flight or transport of goods, had recently been approved by the Macri administration in February. Now, however, the government has backtracked, suspending any changes to the tax until December 31st.

However, the government has also made it clear that any backtracking will not result in lower ticket prices—they have simply delayed an increased tax rate until the end of the year. Argentine airline representatives made sure to emphasize this point in an interview with La Nación: “Technically there is no change, an increase was suspended so there would be no reason for the rates to go down.”

Long line at Ezeiza airport, via Ritmo Parana

The National Civil Aviation Administration (ANAC)— the entity that regulates Argentina’s aeronautics sector— has explained the reasoning behind this decision, emphasizing the need to “apply measures to promote international flights” within the framework of “the national policy in place, which aims to ultimately strengthen the development of Argentine aviation.”

These changes come in a current economic context that has complicated things for commercial airlines, whose key input, fuel, is a dollarized asset. With the plunging peso and rampant inflation within Argentina, international projections foresee increases in the price of oil in the short term, which will already raise the cost of international travel— a point that ANAC emphasizes to justify the suspension of increased tax rates.