Explaining the reality of Argentina to a foreigner is a practically impossible mission. I tried many times believe me, and the answer is always the same: perplexity. To the point that, when the conversation happens in person, it is shocking how their faces transform over the minutes. It is that some situations are so, but so, ridiculous that they border on the implausible. Among many, that exists more than a dozen exchange rates between the peso and the dollar, with such hilarious variants as the “Qatar dollar”, for those who wish to travel to the World Cup, or the “Coldplay dollar”, for the organization of recitals and other international events in the country. However, one of the points that provokes the most incredulity is price distortion in credit card spending billed in dollars; something that has generated controversy again in recent hours with the most recent adjustment in the rates of YouTube Premium.
First thing’s first. Yesterday afternoon, YouTube Premium subscribers in Argentina received an email reporting a soon price increase. The change will be effective from next November 21, and customers will suffer from it from the billing cycle following that date. This situation will not only affect Argentine users, since the service will also will change your rates in the United States, Canada, the United Kingdom, Japan, New Zealand, and Turkey. The difference is that in most of these territories only the price of family plans will rise, while in the case of Turks and Argentines the impact will extend to those who pay for individual membership.
Thus, the individual YouTube Premium plan will jump from 119 to 389 pesos per monthwhile the relative will pass from 179 to 699 pesos per month. In other words, the increases will be 227% and 290.5%, respectively. Brutal, without a doubt. However, these new prices only tell part of the story and are nowhere near what subscribers will ultimately pay. Why? Because at those figures You have to add the taxes on consumption in dollars with credit cards. How much more will users have to pay on top of the new prices, then? It depends on the jurisdiction in which each client lives, but it will be 75% on average.
Taxes, as a covert method of devaluation
In Argentina, everything related to the dollar is a real chaos. It is not for nothing that there are so many current exchange rates. The situation is so complex that it is very difficult —or even impossible— to refer to an economic variable without it being sprinkled with many others. But I will make the effort to simplify this explanation as much as possible. Wish me luck.
To understand why consumption in dollars with credit cards —as is the case with YouTube Premium— are taxed so highly, we must first understand the restrictions on access to the dollar. Currently, in Argentine territory there is a limitation on the international currency market, popularly known as the “dollar stocks”. In theory, an Argentine today can only buy 200 dollars per month for hoarding through official channels (banks and exchange houses), although there is a long list of ‘buts‘ Y ‘as long as‘ which makes it quite a bit more complicated. Anyway, we won’t go too deep into that.
What they should keep in mind is that if a person goes to a bank with the intention of buying dollars, they will find that 1 dollar is trading at 159.50 pesos. However, two taxes must be added to that price: one of 30%, called PAIS Tax (Law 27,541) and one of 35% for perception of Income Tax (R4815/2020). So, to buy 1 dollar you will not have to pay $159.50, but approximately $263. On the other hand, if the person who buys dollars at $263 decides to sell them at the bank, they will be quoted at the official value, which today is around 151 pesos.
Economists agree that it is a covert method of devaluation, also considering that all other types of changes currently in existence —including informal or blue— are close to 300 pesos.
How does this relate to the YouTube Premium price hike? That subscription services billed from abroad are covered by a similar tax framework, even if the credit card is charged in pesos. This not only affects Google’s video platform, but also Spotify, Netflix, NBA League Pass or Xbox Game Pass, to name a few others. Personally, the only platform that has not charged me all the taxes on consumption in dollars has been Disney +. This is probably due to the fact that the billing for said service (along with Star+) is made from its Argentine subsidiary, so that the only thing that applies is VAT.
Breaking down the 75% tax on YouTube Premium and other platforms
The 75% (average) tax that is applied to the payment of subscriptions such as YouTube Premium in Argentina is broken down as follows:
- 45% income tax perception.
- 21% Value Added Tax (VAT).
- 8% of the COUNTRY tax.
There are also additional surcharges in some regions of the country. For example, in ten provinces an additional 2% is charged for the tax on Gross Income; while in the City of Buenos Aires 1.2% more is paid for the stamp tax.
Thus, in my case at least, the 119 pesos per month for YouTube Premium become just over 208 pesos. And the example is repeated all the time. A $279 Spotify subscription is actually $485.46, while Xbox Game Pass Ultimate is advertised at $899, when the true final price is $1,564.26.
Not for nothing, each new increase in the prices of services causes widespread discontent among users in Argentina. Either because of the increase in the fee for the service itself, or because some official pulls out a new tax that punishes or discourages this type of consumption.
And the craziest thing of all? Despite increases of more than 200% in the value of subscriptions, plus 75% taxes, services like YouTube Premium remain outrageously cheap (in dollars) in Argentina, when compared to what happens in other parts of the world.
Expensive in Argentina, cheap in the eyes of the world
Under the new prices, and counting the tax surcharge, an individual subscription to YouTube Premium it will cost around 680 pesos from next month. That is, 4.2 dollars at the official price or 2.8 dollars at the informal value or blue of the date, the latter being the most realistic parameter. In the US, the same plan costs $11.99 per month.
The same happens with the YouTube Premium family plan. The new Argentine price with taxes included will be around 1,230 pesos ($7.7 at official value, or $4.2 at blue value). For Americans, an identical subscription was $17.99, and from next month it will be worth $22.99.
The difference, of course, lies in the general economic context. For years, Argentina has been in a very vulnerable position, with inflation and devaluation taking their toll. Something that has even led the public to strongly lean towards assets that are outside the traditional financial structure, such as stablecoins and other cryptocurrencies.
So, the commercial strategy of the platforms when it comes to attracting customers cannot be identical to that of countries with less affected economies. Keep in mind that despite the effects of inflation around the world, the $5 increase in the family plan It will be the first change of this type that YouTube Premium will undergo in the United States. The individual subscription, meanwhile, will continue to be sold at the same price as in 2018.
With inflation of 6.2% in September and a year-on-year figure that has already reached 83%, the outlook for Argentina is far from any encouraging scenario. It is true that subscription services will never be essential elements for daily survival, such as food and shelter, but they help expose the scope of the underlying problems and the lack of solutions despite the ridiculous economic plans of the day.
In a country of always tense moods, where the prices of everything increase almost daily, listening to music or watching a movie has also become a luxury.