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Argentina clamps down on Internet shopping to stem capital flight

  |   Jan. 22, 2014 at 5:43 PM
BUENOS AIRES, Jan. 22 (UPI) -- Argentine shoppers on the Internet are being asked to pay up to 50 percent tax on what they hoped will be bargains to escape gouging by local sellers.

The government began clamping down on Argentine online shoppers when Argentine news media reported the buyers could make huge savings on essentials as well as comfort or luxury goods that are sold locally at exorbitant prices.

A runaway inflation, a series of well-orchestrated shortage scares, genuine scarcities and the government's obtrusive style have combined to push increasing numbers of shoppers to the Internet.

But officials say they'd have none of it, or some if the buyers coughed up the right amount of tax. That, as Internet shoppers are finding, can often lead to a 50 percent surcharge on goods they buy online.

Officials say they don't mind Internet shopping so long as Argentinians stay on national websites, and not go to foreign domains.

This is how it works -- or rather, as critics point out archly, it's all meant to work. State-run postal services intercept packages of goods bought online and demand steep duties before releasing the merchandise.

The aim, officials say, is to prevent flight of capital. Since last year, President Cristina Fernandez has slapped one new rule after another to prevent Argentinians from spending online, which results in Argentina having to fork out foreign payments from depleted currency reserves.

Argentinians accuse the government of blowing the fun out of Internet shopping, of intrusive and unreasonable behavior and of simply not managing a crisis they allege is a product of misguided policies.

Argentinians buying online now submit a sworn statement to the tax agency, promising to make no more than two purchases a year on foreign websites, as they try to recover goods delivered to their name. They are then asked to pay tax assessed on each online purchase before being allowed to receive their goods, official gazette data indicated.

In December Argentina's Electronic Chamber of Commerce announced big promotional discounts on goods bought online. The promotional campaign generated about $30 million in online sales -- reported to be a 1,200 percent rise over the turnover a year earlier.

Officials say they don't mind Argentinians splurging online but they take exception to shoppers buying on websites outside Argentina. Those purchases cause the country's dollar reserves to drain out, officials say.

Argentina is struggling to extricate itself from the effects of its 2001-2002 sovereign default, which triggered one economic crisis after another in later years. Critics say short-sighted government policies are also to blame and have exacerbated the problem.

Chief of Cabinet Jorge Capitanich defended the new rules curbing shopping online outside of Argentina, the Buenos Aires Herald reported.

The rules are meant to promote national interest and industry, Capitanich said. "What we are doing is defending Argentines' money," he said.

Before the rules came into force, up to 65 percent of merchandise bought overseas came from Hong Kong and China, officials say. It may be a while before the full impact of the new rules becomes known.

"We want transparent operations and we want to ask the Argentine people: 'Do you want there to be national production?' Therefore we have to defend what is ours," the Herald quoted Capitanich as saying.

"It is not easy to penetrate countries in order to sell value-added Argentine products. What we can do is defend Argentine money, the national interest; it should be shared by all."

The official lashed out at Argentine critics of government policies, calling them "eternal failures, employees or spokesmen for dominant groups." The government has been accused of lacking a coherent model for the running of Argentine economy. Capitanich counters the critics' comments "border on the ridiculous and irresponsible," the newspaper reported.

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