Immediately after winning October’s midterm elections, the government began discussing a deep tax reform with the provincial governors. The negotiations include potential modifications to key taxes such as the one to gross earnings (Ingresos Brutos) and to checks, which represent billions of pesos in revenue for both the national and provincial administrations.
But there are also others that, while perhaps not as massive, did make the headlines for their symbolic value, their importance in certain regional economies, and the potential impact they would have in mass consumption. Chief among them were the proposed taxes on wine and beer.
Initially, the government announced its intention to raise the tax on beer from eight to 17 percent, and the one on wine from zero to 10 percent. Predictably, this caused for producers and consumers to freak out. The former, because this would take them to substantially increase their prices only to keep the current state of their businesses – should people not mind paying the increase. And the latter, precisely because of that.
As a result, representatives from the industries fiercely opposed the proposal. Mendoza Governor Alfredo Cornejo led the opposition to the tax on wine, while the representatives of the Argentine beer industry Chamber indicated that they would have to increase their prices by six percent, should the measure go forward.
Finally, and for the relief of all concerned, the government decided to go back on its plan. The tax on beer will remain at eight percent and wine on zero. “I just had a meeting with President Macri and he confirmed that the tax on wine won’t go to Congress, so it stays at zero,” said Cornejo. “We met with the entire sector and have expressed our reasons. We understand we have been listened to,” he added.
Moreover, Cornejo indicated that from now on, wine will be considered a “healthy drink,” after indicating in the meetings that research assures wine has anti-oxidant properties, and helps to prevent heart problems, among other reasons.
Beer won’t be considered healthy, but the industry representatives got what they wanted too. Same as all the people who were dreading the way in which the increases would impact in their wine and beer budgets.