The Chamber of Deputies passed a bill that aims to refund value-added tax (VAT) on basic goods bought with debit cards for certain sectors based on their income. The Senate must now give the bill treatment. If approved, it would make a temporary VAT-refunding program currently in place the law.

The bill was approved with 134 votes in favor and none against. Deputies from the ruling coalition Unión por la Patria (UxP), who presented the bill, gathered support from left-wing coalition Frente de Izquierda-Unidad, as well as national deputy and presidential candidate Javier Milei (La Libertad Avanza, LLA).

Opposition coalition Juntos por el Cambio (JxC) didn’t vote against it but chose to abstain, saying that it is an “inflationary” policy.

If passed by the Senate, the new law will come into force on January 1, 2024. It will apply to family welfare and labor program recipients, as well as workers and pensioners with an income below the equivalent of six minimum wages or minimum pensions, respectively. Domestic workers and unified tax-paying workers will also be eligible.

In Argentina, VAT is 21%. If approved, the refund will be up to 21% of the monthly value of the Basic Food Basket for a typical family (usually considered to be an adult couple with two young children).

The “Buy without VAT” program is capped at AR$18,800 (US$51.4 at the official rate, US$21.8 at the MEP rate) per month.

On September 18, Economy Minister and ruling coalition Unión por la Patria presidential candidate Sergio Massa launched a VAT refund program by decree with similar conditions. It will be in place until December 31.

“It is focused on foods, drinks, fruits, vegetables, meat, and hygiene products,” Massa said during the announcement on September 13. 

“The goal is to have the basic basket covered and compensated for by this benefit.”

The refund — both in the current program and the new bill — is automatic and done 48 hours after purchases made with a debit card. If approved, the new law will establish the same conditions for the refund.