Argentina plans to partially roll back an export tax on hydrocarbons to a maximum of 8pc from a previous 12pc, according to a bill that the new government of center-left president Alberto Fernandez sent to the congress this week.
Under the previous pro-business government of former president Mauricio Macri, hydrocarbons were subject to an export tax of four pesos per US dollar sold abroad, which at the current exchange rate translated into an effective rate of 6.7pc. In office for less than a week, Fernandez proposed a 12pc levy before easing it to the maximum 8pc rate stipulated in emergency legislation now before the congress.
The sweeping bill increases taxes on certain agricultural exports as well as foreign currency purchases while also mandating a freeze on electricity and natural gas rates for up to six months.
The special tax provision for hydrocarbons was subject to a last-minute adjustment made after a draft of the bill was shared with journalists early yesterday, and was the fruit of an appeal by Omar Gutierrez, governor of shale-rich Neuquen province, to Fernandez and production minister Matias Kulfas.
Gutierrez later said the government had accepted his petition to lower the tax on hydrocarbon exports.
The tax increases come at a time when Argentina is re-emerging as a modest pipeline gas exporter, mainly to Chile, thanks to rising shale production. Argentina has also started exporting LNG through a 2.5mn cm/d floating liquefaction barge in Bahia Blanca that shipped its first full cargo in November.
Argentina's crude exports increased 14pc in January-October, on the year, to 66,442 b/d, according to energy secretariat data. During the same period, pipeline gas exports more than doubled to 1.8mn cm/d (63.7mn cf/d) from just 670,780 cm/d in the first 10 months of last year.
The more modest rise in export taxes on hydrocarbons will impact domestic prices, because producers take into account the amount of tax that would be withheld before deciding whether to sell their output abroad or domestically.
The Fernandez government says the new suite of export taxes will bolster desperately needed social spending.
Fernandez was inaugurated on 10 December with a pledge to combat rising poverty that he blames on Macri-era austerity measures.
The emergency bill is likely to win broad approval in both chambers of the congress, where the governing Peronist coalition has a majority of the seats.
By Daniel Politi
