|Multinational electronics manufacturers have launched a lobbying push to halt a bill in Argentina's Senate that would double the value-added tax on cellphones, televisions and cameras.|
The increase, which was approved by the lower house of Congress in August, was proposed by leftist President Cristina Kirchner to boost flagging government revenue and stimulate local manufacturing and job growth.
The so-called impuestazo, or big tax, would double to 21% the value-added tax on most electronics goods not produced in the Tierra del Fuego special economic zone.
Mrs. Kirchner says the tax would mean "fewer dollars that leave the country to pay for imports and more jobs for all Argentines."
How big is domestic production?
|High taxes and transport costs already make electronics products more expensive in Argentina than they are in most of the rest of Latin America. Facebook groups have formed to protest the tax increase, and Argentine hackers recently posted a manifesto on several government Web sites assailing the proposal as "retrograde and infantile."|
Argentina began offering tax incentives to electronics companies establishing operations in Tierra del Fuego in the 1970s to spur development in the isolated southern archipelago. Today, operations there remain modest.
Argentine-based manufacturers as a whole account for only about $300 million of Argentina's approximately $4 billion market in telecommunications and computer goods, according to a study by academics from Columbia University and Argentina's San Andres University.
"When the Argentine government raises taxes on technology to benefit a few silly assembly factories, it shows that it doesn't understand the modern world or Argentina's role in it," says Julian Gallo, an Argentine technology consultant.
Last year, Argentines bought 10 million cellphones, spending about $1 billion, said Enrique Carrier, a Buenos Aires technology analyst. Only about 2% were made in Argentina, while roughly 65% were imported from Brazil and 20% from Mexico, according to the Chamber of Information Technology.
Cristina is a walking breathing economic luddite. If you want more domestic manufacturing then make it easier to build and grow companies within your borders. All this tax will do is hurt jobs and companies in the country, depress sales, technological innovation and make a bad business climate worse overall.