Argentina's government plans to substantially overhaul its tax code to boost economic growth and reduce inequality, Treasury Minister Nicolás Dujovne said Tuesday.
The government aims to cut corporate income taxes to 25% from 35% within five years, reduce social security taxes on employers and eliminate taxes on certain bank transactions. Federal officials also plan to work with provincial governors to lower so-called gross income taxes on goods, Mr. Dujovne said.
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President Mauricio Macri will send the proposals to Congress within two weeks, Mr. Dujovne said, adding that he expects Congress to approve them.
"We're going to move toward a more normal tax system, more like what other countries have," Mr. Dujovne said at a news conference.
Argentina ranked dead last out of 137 countries in a recent survey on tax-rate competitiveness by the World Economic Forum. Mr. Dujovne said the Macri administration plans to reduce key taxes to help companies become more competitive.
"We have a problem, and we need to recognize it," he said.
The announcement comes a week after Mr. Macri won widespread backing from Argentines in a midterm congressional election. And it is part of about 40 new policy proposals that Mr. Macri aims to implement over the next year, officials have said.
The government also plans to create a 15% capital-gains tax on certain financial transactions. Mr. Dujovne said Argentina is currently the only large country in Latin America that doesn't collect such a tax. He said he doesn't expect it to have any effect on the country's comparatively small capital market.
The treasury minister said the government will enact the changes gradually over a period of five years, noting that both Chile and Uruguay similarly overhauled their tax systems.
In addition, the government plans to eliminate a 17% tax on cellphones, televisions and monitors and ditch a 10% tax on high-end cars. Meanwhile, it will double taxes on private airplanes and expensive boats and motorcycles.
The decision to cut taxes on consumer electronics items is certain to prove popular with middle-class Argentines, many of whom frequently complain that smartphones, TVs and other items cost far more in Argentina than in other countries.
In a move that may be less popular, the government will slap a 10% tax on wine and a 17% duty on champagne. It will also raise taxes on sugared sodas and double the tax on beer to 17%.
The fiscal cost for the tax overhauls will be nearly neutral, amounting to about 0.3% of total economic output within five years, Mr. Dujovne said.
"We have two goals that compete against each other, which is to cut spending and to lower the deficit," Mr. Dujovne said. "So we have to lower taxes gradually to take care of the deficit. That's why we're taking a gradual, five-year path with this."
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(END) Dow Jones Newswires
October 31, 2017 17:40 ET (21:40 GMT)