Argentina is reducing a key import tariff in a bid to further cool inflation as President Javier Milei weighs the trade-offs between economic goals that are often conflicting.

Economy Minister Luis Caputo announced it would cut a levy known as the PAIS tax on imports from 17.5 per cent to 7.5 per cent. The Milei administration had actually raised the tax after assuming office on Dec. 10 to boost federal revenues and close a fiscal deficit, but the higher tariff has driven up prices on imports.

Milei’s main priority is to curb runaway inflation that hit 26 per cent per month following his currency devaluation last December but has since eased to 4 per cent by July. However, his austerity measures aimed at achieving a fiscal balance, such as removing subsidies on home utilities and public transit, risk pushing prices up.

Reducing the import tariff could help ease price pressures as Milei proceeds with subsidy cuts in an effort to both lower inflation and close the deficit.

The libertarian also promised during his campaign to reduce taxes, making the move a symbolic gesture to voters that he has kept his word.

More broadly, cutting the PAIS tax is a small step in Milei’s efforts to normalise Argentina’s economy as the government seeks a new agreement with the International Monetary Fund to replace the existing $44-billion deal. So far, negotiations on a new program haven’t advanced in concrete terms while Milei maintains currency controls on a peso that Argentines perceive as overvalued.

Through July, the government has collected 4.3 trillion pesos ($4.5 billion) in revenues from the PAIS tariff, which accounts for around 6 per cent of total tax revenues, according to government data. The tax is applied to a range of transactions beyond imports.

Still, Milei and Argentina have a long way to go. For instance, the PAIS tax is applied at a different rate when Argentines exchange pesos for dollars at banks. That rate isn’t changing for now, nor is the $200 monthly limit that Argentines can exchange as Milei maintains currency controls.

Argentina is reducing a key import tariff in a bid to further cool inflation as President Javier Milei weighs the trade-offs between economic goals that are often conflicting.

Argentina is reducing a key import tariff in a bid to further cool inflation as President Javier Milei weighs the trade-offs between economic goals that are often conflicting. Economy Minister Luis Caputo announced it would cut a levy known as the PAIS tax on imports from 17.5 per cent to 7.5 per cent. The Milei administration had actually raised the tax after assuming office on Dec. 10 to boost federal revenues and close a fiscal deficit, but the higher tariff has driven up prices on imports. Milei’s main priority is to curb runaway inflation that hit 26 per cent per month following his currency devaluation last December but has since eased to 4 per cent by July. However, his austerity measures aimed at achieving a fiscal balance, such as removing subsidies on home utilities and public transit, risk pushing prices up. Reducing the import tariff could help ease price pressures as Milei proceeds with subsidy cuts in an effort to both lower inflation and close the deficit. The libertarian also promised during his campaign to reduce taxes, making the move a symbolic gesture to voters that he has kept his word. More broadly, cutting the PAIS tax is a small step in Milei’s efforts to normalise Argentina’s economy as the government seeks a new agreement with the International Monetary Fund to replace the existing $44-billion deal. So far, negotiations on a new program haven’t advanced in concrete terms while Milei maintains currency controls on a peso that Argentines perceive as overvalued. Through July, the government has collected 4.3 trillion pesos ($4.5 billion) in revenues from the PAIS tariff, which accounts for around 6 per cent of total tax revenues, according to government data. The tax is applied to a range of transactions beyond imports. Still, Milei and Argentina have a long way to go. For instance, the PAIS tax is applied at a different rate when Argentines exchange pesos for dollars at banks. That rate isn’t changing for now, nor is the $200 monthly limit that Argentines can exchange as Milei maintains currency controls.

Argentina’s Milei reduces key import tariff to curb inflation

Argentina's Senate on Wednesday (June 12) approved a economic reform plan proposed by President Javier Milei in an overall vote.

The motion initially tied 36-36, with the head of the chamber, Vice President Victoria Villarruel, breaking the tie.

Earlier, the&nbsp;Buenos Aires&nbsp;riot police&nbsp;fired tear gas and water cannons to disperse protesters gathered outside Congress as the lawmakers inside were debating budget-cutting reforms.

The protesters - who say the measures will hurt millions of Argentines - threw petrol bombs and stones, setting a car on fire.

Several were reported injured, with local media describing the scene on Wednesday (June 12) as not less than a battlefield.

Also read:&nbsp;<a data-ctorig="https://www.wionews.com/business-economy/protests-erupt-in-buenos-aires-against-mileis-economic-overhaul-672016" data-cturl="https://www.google.com/url?client=internal-element-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/business-economy/protests-erupt-in-buenos-aires-against-mileis-economic-overhaul-672016&amp;sa=U&amp;ved=2ahUKEwjf5LrSw9eGAxXNsFYBHdOdDg44ChAWegQIBBAC&amp;usg=AOvVaw3JaULH8FEAlODHxw_HaBU_&amp;arm=e&amp;fexp=72519171,72519168" dir="ltr" href="https://www.wionews.com/business-economy/protests-erupt-in-buenos-aires-against-mileis-economic-overhaul-672016" target="_blank">Protests erupt in&nbsp;Buenos Aires&nbsp;against Milei's economic overhaul</a>

It may be mentioned here, the reform package, proposed by right-wing President Javier Milei to revive the country's flagging economy, includes declaring a state of economic emergency, cutting pensions and watering down labour rights.

The measures are opposed by leftist political parties, labour unions and social organisations.

Clashes erupted when protesters attempted to breach fences to reach Congress, hurling rocks at officers who responded with pepper spray.

<img alt="Buenos Aires rocked by clashes " data-entity-type="file" data-entity-uuid="4ea602e1-7d2e-48ad-82c2-a08b182984ff" src="//cdn.wionews.com/sites/default/files/inline-images/Untitled%20design%20%2854%29_4.png" />

According to the observers, dozens of demonstrators and a handful of MPs received medical attention.&nbsp;

At least five opposition MPs in the crowd were hospitalised, legislator Cecilia Moreau told AFP news agency.

"We cannot believe that in Argentina we are discussing a law that will put us back 100 years," Fabio Nunez, a 55-year-old protesting lawyer, was quoted by AFP as saying.

Later, President Milei's office issued a statement thanking the security forces for suppressing what it called "terrorists" attempting to stage a coup d'état.

However, the debate on the bill in the Senate is set to continue late into Wednesday, with senators expected to take a vote on it.

Also read:&nbsp;<a data-ctorig="https://www.wionews.com/world/train-crash-in-argentine-capital-leaves-30-injured-720209" data-cturl="https://www.google.com/url?client=internal-element-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/world/train-crash-in-argentine-capital-leaves-30-injured-720209&amp;sa=U&amp;ved=2ahUKEwiw7ILDw9eGAxW0fGwGHaE-ANoQFnoECAAQAg&amp;usg=AOvVaw37yhtr5LfGU5158UFEyDAQ&amp;arm=e&amp;fexp=72519171,72519168" dir="ltr" href="https://www.wionews.com/world/train-crash-in-argentine-capital-leaves-30-injured-720209" target="_blank">Train crash in Argentine capital leaves 30 injured</a>

Notably, the bill was approved by the lower house in April&nbsp;with significant changes.

If approved in the Senate, it will return to the lower house for final approval.

Milei came to office in 2023 after vowing to take a chainsaw to public spending.

While on the campaign trail, he even brandished a chainsaw while making a speech to symbolise his determination to do so.

(With inputs from agencies)

Argentina's Senate on Wednesday (June 12) approved a economic reform plan proposed by President Javier Milei in an overall vote. The motion initially tied 36-36, with the head of the chamber, Vice President Victoria Villarruel, breaking the tie.

Argentina's Senate on Wednesday (June 12) approved a economic reform plan proposed by President Javier Milei in an overall vote. The motion initially tied 36-36, with the head of the chamber, Vice President Victoria Villarruel, breaking the tie. Earlier, the Buenos Aires riot police fired tear gas and water cannons to disperse protesters gathered outside Congress as the lawmakers inside were debating budget-cutting reforms. The protesters - who say the measures will hurt millions of Argentines - threw petrol bombs and stones, setting a car on fire. Several were reported injured, with local media describing the scene on Wednesday (June 12) as not less than a battlefield. Also read: Protests erupt in Buenos Aires against Milei's economic overhaul It may be mentioned here, the reform package, proposed by right-wing President Javier Milei to revive the country's flagging economy, includes declaring a state of economic emergency, cutting pensions and watering down labour rights. The measures are opposed by leftist political parties, labour unions and social organisations. Clashes erupted when protesters attempted to breach fences to reach Congress, hurling rocks at officers who responded with pepper spray. According to the observers, dozens of demonstrators and a handful of MPs received medical attention. At least five opposition MPs in the crowd were hospitalised, legislator Cecilia Moreau told AFP news agency. "We cannot believe that in Argentina we are discussing a law that will put us back 100 years," Fabio Nunez, a 55-year-old protesting lawyer, was quoted by AFP as saying. Later, President Milei's office issued a statement thanking the security forces for suppressing what it called "terrorists" attempting to stage a coup d'état. However, the debate on the bill in the Senate is set to continue late into Wednesday, with senators expected to take a vote on it. Also read: Train crash in Argentine capital leaves 30 injured Notably, the bill was approved by the lower house in April with significant changes. If approved in the Senate, it will return to the lower house for final approval. Milei came to office in 2023 after vowing to take a chainsaw to public spending. While on the campaign trail, he even brandished a chainsaw while making a speech to symbolise his determination to do so. (With inputs from agencies)

Argentina Senate passes Milei reform bill amid ongoing protests

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Argentina’s Milei reduces key import tariff to curb inflation

Argentina Senate passes Milei reform bill amid ongoing protests