How to almost knock down a market inadvertently and not fail in the attempt? The case of the tax on "luxury cars" in Argentina

MONCARZ, PEDRO ESTEBAN

Revista de Economía y Estadística

Facultad de Ciencias Económicas. Universidad Nacional de Córdoba

Lugar: Córdoba; Año: 2018 vol. 56 p. 7 - 7

0034-8066

span style="font-size: 10pt; line-height: 115%; font-family: "Calibri", "sans-serif";" lang="en">Underthe pressure of a growing capital outflow, by the end of 2013 the Argentinegovernment implemented what was known as the tax on "luxury cars".Even when not explicitly declared, the main objective was to reduce imports ofmost expensive cars to reduce the trade deficit of the automotive sector, whichwas contributing heavily to the capital account deficit. Beyond the fact thatpolicy could be categorized as "successful" in terms of reducing aUSD 4.5 billion deficit in 2013 to one of just over USD 0.7 billion in 2014, ithad a devastating and lasting impact on the internal market, that just in 2013had achieved a record in sales. We obtain that during the first year of theimplementation of the tax, the overall impact on sales of models reached by thetax was 53.7%. Despite some differences, the negative impact took place throughoutthe whole year. Not surprisingly, cars reac