More than a decade of energy andtransport subsidies have weakened Argentina’s fiscalcapacity. Following the 2001 crisis, public services tariffswere frozen in an attempt to offset the negative effects onhouseholds’ real purchasing power. However, these subsidiessteadily increased over the years, particularly since 2006,becoming a significant fiscal burden. Though subsidies canbe a tool to protect the poor, in Argentina they led todistortions and a large share have been absorbed by upperclasses and non-residential consumers. This report starts byanalyzing the incidence of the 2014 system of residentialfederal subsidies to residential public services (defined aselectricity, gas, water and transport) building on the workby Puig and Salinardi (2015). This paper consists of sixmain sections. Section two presents the results on theincidence of subsidies to public services. Section threesimulates the distributional impacts of alternative systemsfor electricity, gas and transport subsidies. Section fourconcludes. The methodological Appendix provides full detailsof the methods and data used in this paper.
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