The postponement of the increases planned for May in electricity, gas and fuel tax rates decided by the Government will imply higher expenses for the treasury and lower collections.
The Ministry of Economy places the variation of the Consumer Price Index (CPI) of the Indec for April in the area of 9% monthly which, if confirmed, would be the first time that the indicator travels 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.
Energy basket
In the Ministry of Energy, headed by Eduardo Rodríguez Chirillo, they had announced 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 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 within 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 official sources who closely follow the issue.
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.
Gasoline and diesel
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 Decree 375/2024 in the Official Gazette 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 President Javier Milei, Chief of Staff Nicolás Posse and Economy Minister 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 Fernández. The 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.
“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. (Infobae)
