Argentina's new government, under President Mauricio Macri, has opted to cut excise taxes on new cars, reports Reuters. The move is intended to encourage local automotive production, with Macri's government pledging to review the measure after six months to determine its level of success, according to the report. Specifically, the tax on new cars costing more than ARS350,000 (USD26,500) will fall from 30% to 10%; the tax on luxury vehicles costing more than ARS800,000 will fall from 50% to 20%, Production Minister Francisco Cabrera reportedly said. He said, "We're eliminating red tape and distortions that limited investments with a focus on generating more and better jobs. There's confidence in the country's productive capability that is waking up." Cabrera also says that he expects about USD3.8 billion in investments in local auto production through 2017.
Significance: Argentina's car sales have been under pressure. The sales climate in Argentina, combined with the recession in neighbouring Brazil affecting export sales, means Argentina's vehicle production was down 11.7% through November. With exports down, these measures are intended to help drive local demand, thereby helping to maintain or increase local production.
