Electricity, gas, fuel and bus taxes: until when did the Government postpone each of the increases

The postponement of the increases planned for May in electricity, gas, fuel tax and bus ticket rates decided by the Government will imply higher expenses for the treasury and lower collections. The priority now is to shore up the slowdown in the inflation and avoid further blows to the weakened pockets of the middle class.

In the Ministry of Economy they locate the variation of the Consumer Price Index (CPI) of the Indec April in the area of ​​9% monthly which, if confirmed, would be the first time that the indicator has traveled below double digits in five months. For May, the official expectation is that the increase in the CPI will be below 6% monthly.

To sustain this decline, planned increases were “launched” that, in principle, should be applied in the coming months.

In the Ministry of Energy, in charge of Eduardo Rodríguez Chirillohad told this medium that the monthly update mechanisms that should have come into force since May to sustain the income of distributors and transporters in real terms were suspended.

They represented an impact of close to 5% on the final electricity and gas bills, much less than the 150% and 450%, respectively, that they accumulated since January. There were no details on when the indexing scheme will be resumed.

It is in this framework that the implementation of the removal of subsidies for electricity and gas, based on the implementation of the Basic Energy Basket (CBE), may be delayed until July, according to what they told Infobae official sources that follow the issue closely.

They are now working on a “targeted subsidies” scheme which is, in short, a “more progressive” removal of subsidies than originally planned. Although the analysis of how to carry it out has just begun, this will imply new increases in energy rates, especially for some middle class sectors.

Fundamentally, the focus is on the almost 7 out of every 10 users who correspond to middle and low income segments, who pay less than 5% of the cost of electric energy and around 20% in the case of gas.

The Government does not rule out deferring again the increase in the Liquid Fuel Transfer Tax (ICL), which was originally going to be applied in May and has now been moved to June. Another increase is planned for July, which is also under review. It happens that the update of the tax is transferred to gasoline and diesel at pumps – from YPF, Shell, Axion and Puma Energy – with first and second round effects on inflation.

In parallel, oil companies observe that since January there has been a delay in their prices in real terms. That is why last Wednesday they advanced with an average increase of 4% to seek “recomposition” and transfer the slide of the official dollar, of 2% monthly, with the horizon, now more distant, set on reaching international values.

Last Thursday the Government published in the Official bulletin he Decree 375/2024 in which it postponed to June 1 the update of the ICL scheduled for May “in order to stimulate the growth of the economy by guaranteeing a sustainable fiscal path.” It bears the signature of the president Javier Mileithe chief of staff Nicolas Posse and the Minister of Economy Luis Caputo.

The increase contemplated inflation in the last quarter of 2023, as part of the official path to recover tax collection after the freeze applied during the presidency of Alberto Fernandez. He Argentine Institute of Fiscal Analysis (Iaraf) estimated in its latest report that the increase in the fixed amount tax of $70 from $132 per liter to $202 should be applied in May, that is, a jump of 53%. That was moved to June.

To the increase in the ICL that was moved to June will be added the one that should be applied in July as provided for in the quarterly tax update rule, to which the CPI for the first quarter of 2024 would be applied. That is why it is not rules out deferring the increase again. “The decision will depend on the evolution of inflation in April and May,” an official source was limited to commenting when asked by Infobae.

“In effect, on July 1 the tax should rise 51.6%, rising to $306 per liter,” mentioned Iaraf in the event that the quota that has now been moved to June is added.

On the other hand, the increase in bus tickets in the Buenos Aires Metropolitan Area (AMBA) was also postponed. Currently the minimum rate remains at $270 for those who have their SUBE card registered.

The rule published in February by the Ministry of Transportation contemplated that from April an indexation formula would be applied based on the Consumer Price Index of the last two months.

For May the index will show 51.6%, although that is the limit they have to raise tickets without having to call a new public hearing. Now the Government must recognize more subsidies for companies to compensate for the difference between increased costs and inflation.

The increases that the Government applied to electricity and gas services in its first four months in office are only comparable to those that took Mauricio Macri more than 3 years, economists highlight.

A report from Fundación Capital detailed that the average residential increases in electricity (146%), gas (427%), water (209%) and buses (410%) occurred in a period in which inflation was 112% and salaries grew only 96%. This implied doubling the weight of public services in family income to levels not seen since 2019 after the adjustment of Macrism.

“The weight of spending on public services in the AMBA (weighted average) on the average income of registered employees (Ripte) has more than doubled in the last five months, going from 4.6% in December to 10.8% currently. And although the weight of these services increased across the board, in households with lower purchasing power the impact was greater,” commented the entity that directs Carlos perez.