Argentina Eliminates VAT On Essential Food Products Amid Peso Drop - President Mauricio Macri

The government of Argentina has decided to abandon the 21-percent value-added tax (VAT) on essential food products to compensate price hikes amid a collapse of national currency peso, President Mauricio Macri said

BUENOS AIRES (UrduPoint News / Sputnik - 16th August, 2019) The government of Argentina has decided to abandon the 21-percent value-added tax (VAT) on essential food products to compensate price hikes amid a collapse of national currency peso, President Mauricio Macri said.

"I made an unparalleled decision which has not ever been made in our country. We will abandon the VAT for essential goods bought by Argentinian families ... This measure will be in effect until the end of the year," Macri said in a national address, aired live on his Twitter late on Thursday.

As of Friday, the VAT will not be included in the price of bread, milk, butter, pasta, rice, flour, canned fruit, vegetables and mate.

Buenos Aires residents told Sputnik that prices had already surged by 20 percent, including the prices on goods produced inside Argentina.

"The prices for nearly anything have grown by at least 20 percent. I do not know what to do," Elena, a resident of the capital said.

Earlier this week, the peso dropped by around 30 percent � from 46-47 pesos to 60-64 pesos per US dollar � amid the political instability in the country.

The decrease in the national currency rate followed the announcement of the results of the primaries ahead of the election scheduled to be held later this year. According to them, opposition alliance Front of All led by Alberto Fernandez gained over 47 of the vote, while Macri's Together for Change coalition gained only 32 percent.

However, on Thursday, Argentina's largest state bank, Banco Nacion, sharply strengthened the peso, so the dollar cost 58 pesos instead of 63 pesos, which was the case on Wednesday.