Wednesday, September 9, 2009

Il Impuestazo

The first famiglia of Argentina has spoken again.

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 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."

¿"Fewer dollars leaving the country"? These guys can't even make their own currency, much less a modern cell phone. I Understand the logic of wanting to build your own industry, and I supported K and co. when the issue was the tax hike on agricultural exports. I even agree that steps to diversify beyond agriculture are absolutely warranted, though more for political than economic reasons. But Argentina is never going to be a global competitor in cell phone and TV production. It just isn't. So a tax like this is entirely a subsidy for a few businessmen to produce shoddy sub-standard computers in the ass end of the world (no coincidence that K used to be governor of the province of Santa Cruz). And the tax is paid for directly by every Argentine who buys a computer, and indirectly, because this means that fewer people will buy computers and the country will slide ever further in the direction of Chavez-landia -- a backwater in the modern digital economy.

This is such a blatantly asinine economic policy that I almost have to wonder whether it wasn't sponsored by the campo, in an effort to keep the country barefoot and pregnant, so to speak, and forever chained to the same agricultural export model it has always had. I mean, there's no way that cell phone production will ever become a big industry with the same political pull, so subsidizing that group is harmless from the perspective of the big ag exporters.

Why can't these two ever come up with a progressive policy that actually makes sense? For example, why not raise the tax on imports of farm equipment, and stimulate an industry that makes some freaking sense given the realities of the country. If I were Argentina I'd try to compete with Catepillar and John Deere before I took on Nokia.

Redistributing wealth is an admirable motive, as long as you don't do it by making everyone poor at once.

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