Public Transportation Prices Rising This Week
By now many of you know the cost of public transportation is going up this week. Subway tickets will rise to 1.10 pesos from 90 centavos. The same will happen to bus tickets. Train tickets will also rise, though by varying amounts. Prices have been absurdly low since 2002, when Argentina devalued its currency.
Prices are rising for one reason: the federal government needs cash. Faced with a global economic slowdown, demand for exports of goods like soybeans has declined. (Taxes on soybeans and other farm goods are a key source of government revenue.) Meanwhile, a cooling domestic economy is putting pressure on the government to get revenue from elsewhere. Raising taxes at a time like this would simply make matters worse. Moreover, the government needs extra cash to fund plans to spend some 71 billion pesos on infrastructure projects that it says will create 400,000 new jobs and bolster economic growth.
But if the government can’t raise revenue through tax collection, and it can’t borrow money like the U.S. government can, then it’s got to cut spending, and that’s exactly what’s happening this week. Ticket prices are rising because the government is reducing subsidies to public transportation by around 800 million pesos a year.
This is the same amount the government cut from energy subsidies in October, when it announced it was raising electricity rates. Last year, the think tank Ecolatina estimated the state would spend 4.2 billion pesos in 2008 to subsidize public transportation. Ecolatina estimated the government would spend about twice that to keep energy prices down. All told, the government spent around 35 billion pesos last year in subsidies.
But now the government needs that money for other purposes. So it is shifting money from one area of the budget to another. While reducing subsidies is not the same as raising taxes, it’s certainly going to feel like this, at least for those for whom 1.10 pesos is a significant expenditure. For others, even for whom the extra 20 centavos isn’t a lot of money, there’s going to be an additional challenge: finding the extra coins necessary to pay the new ticket prices. That could be the single most frustrating thing about the higher prices.
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You’re absolutely right, the rise is not the main problem.
I wonder how they are going to do at subtes, from where they’ll get 90 cents when someone pays with a 2 pesos bill.
I just don’t want to think how I’m going to do to get change for the bus.
[...] As if we didn’t already have enough of a challenge getting 1-peso worth of coins together for the bus (which only accepts coins by the way, and there is no bus pass, no magnetic card, you’d better have your coins. And by the way there is a coin shortage too), it’s about to get a little more tricky. Now we’ll have to pay AR $1.10 for a bus ride as well as the Subte. More information here. [...]
this will be annoying and fun at the same time!
Much better than paying with a $2 note is to pay with a $5 one, then you’ll be getting a $2 note and $1,9 in coins
Try to do this for a while and stock as many coins as you can. It may sound a lil selfish but it works. At least, i used to do it in tolls.. In the Panamericana toll (back in the days when it was $2.2) it was way better to pay with two $2 notes than paying with a $5 one.
strange….
no one is reacting anymore…..
dragno
Good one Juan, I stupidly paid the subway today with a 10, and only got 10c back. Damn! I use the Yanqui Mike strategy with monedas, I make friends with my local vendors give them monedas when I have extra. Today I was short and they gave me 4 monedas today!
Fred fourpointreport.blogspot.com
The article is right on the mark stating: “finding the extra coins necessary to pay the new ticket prices. That could be the single most frustrating thing about the higher prices”. It’s going to be a very, very big problem in Buenos Aires to have the exact change for a collectivo. Argentina has a major coin shortage problem and that should have been resolved before any hike in transportation fares. THIS IS ARGENTINA!