Economy Local 2026-04-03T09:15:44+00:00

Argentina's Tax Revenue Decline Contrasts with Consumption Growth

Argentina faces a paradox: while private consumption and e-commerce sales show significant growth, Value Added Tax (VAT) revenues are declining. Supermarket owners attribute this to falling sales, while the government points to other factors. An analysis of the causes and consequences of this economic phenomenon.


Argentina's Tax Revenue Decline Contrasts with Consumption Growth

Buenos Aires, April 2 (NA) – The information provided by the head of IARAF, Nadin Argañaraz, that VAT collection would have fallen by around 4% year-on-year (after two months of double-digit declines), contrasts with the rebound in private consumption, which grew by 7.9% year-on-year and from which the value-added chain feeds. This growth was celebrated by President Javier Milei and the Vice Minister of Economy, José Luis Daza. Meanwhile, INDEC data shows a growth in private consumption in the fourth quarter of 2025 at 8%, a figure that marks a record compared to 2017 and 2018, as reported by the Argentine News Agency. The lower VAT collection, however, is directly linked to a sharp 5.9% year-on-year drop in February 2026 and a 6.3% monthly drop from January in mass consumption in supermarkets.

Meeting with Supermarket Owners This was the dominant topic at the recent meeting held by supermarket owners with Minister Luis Caputo, where they conveyed their concern over the drop in sales, which for large chains was 5.9% year-on-year in February, according to the Scentia consultancy. The official, who ultimately acknowledged concern over the speed of the economic recovery and a rebound in inflation, shifted the focus of the supermarket owners' complaints to the income tax burden (ingresos brutos) that affects their profitability. This does not align with the priorities overwhelmingly transmitted to him, which were focused on the damage to demand rather than that tax pressure applied by provinces and municipalities.

The conclusion is that a complex start to the year was formed with a contraction in almost all sectors, with the biggest drops in non-alcoholic beverages, perishables, and hygiene, against a 26.5% year-on-year increase in e-commerce. The large supply chains for the basic food basket are the main sources of VAT retention, and therefore, if they sell less, they pay less tax. There was a relevant change in the perception of the tax during March compared to January and February, when, mainly due to VAT from the Customs Administration (DGA), total VAT collection fell 12% and 13%, respectively.

Changes in Consumption Patterns A report by the NielsenIQ consultancy detected a change in purchase channels in Argentina: in the last bimonthly period of 2025, independent supermarkets and warehouses grew. Mass consumption, according to that report, began to show signs of recovery in 2025, with a different dynamic depending on the sales channel. In the last bimonthly period of that year, independent supermarkets grew by 4% in consumption and warehouses by 8%, so that chain supermarkets recorded a 4% drop. The movement reflected a change in purchasing habits, with greater traction from proximity formats.

Super-VAT The Value Added Tax (IVA) is one of the most criticized taxes in the country, as it affects a large proportion of people with lower resources. That is, the IVA, by taxing consumption, directly affects citizens with low purchasing power, as they tend to spend all their income. For example, a person who earns a monthly income of $50,000 and spends it all will have a 100% impact from the IVA (generally 21%, as it is the standard rate). This means that of those $50,000, approximately $8,677.68 will be from IVA, although this is usually not "noticed" at a glance, as the IVA is part of the final prices. Currently, there are 3 types of percentages to be charged: on the one hand, there is the 21% rate, which is the general rate; a 10.5% rate applies to some goods, being a reduced rate; and finally, 27% applies to certain activities, being the highest rate.

There has been a project circulating for some time to incorporate income tax into the national rate and convert it into a Super-VAT.