The specter of the downward slide that the Macri administration entered after its victory in the mid-term elections has a lot to do with the decision to undertake reforms designed, but never implemented before the post-electoral time window disappears. Furthermore, the conviction of close economists and others (“baboons” and “serial blunders”) that the program was no longer “closing” and needed an urgent pit stop. The depth of the repair, from an engine change to a simple service, will depend on the diagnosis that arises and then on the expectations placed on the effectiveness of your return to the track. And if there is a reform that synthesizes all these proposed changes at the tax, labor and pension level, through trial balloons and transcendences, it is the one that put the monotax regime under the spotlight.
die of success. The system, which emerged as an attempt to introduce self-employed workers (workers and small business owners) into formality who until then could not even think about becoming self-employed, was projected in 1998 to include 300,000 taxpayers, but over time it increased to the current numbers (3.7 million taxpayers registered under this legal format). According to data from the Ministry of Labor and INDECit is estimated that in total there are 6 million self-employed workers, of which: Those registered as self-employed are 6%, those with Monotributo are 34% and those not registered or informal are the remaining 60%.. These data would show that the simplicity and low cost of the Monotributo do not prevent the majority of self-employed workers from choosing to operate informally.
The explosive response of the active population was due to several factors and not only to the benefits of the formula used (greater practicality and lower tax burden). Firstly, it was a way to include informal workers with some tax umbrella, to avoid the VAT that is so difficult to discharge on small merchants and workshops that work in a gray area; and generate some pension and social assistance containment. Very little compared to the benefits of a “blank” job but much more compared to the inhospitable helplessness of informality. The damage was to have opened an escape door and undermined financing through the salary and employer burdens of the retirement system and the generation of a gigantic tax gap between the “traditional” self-employed (the most punished), the employees (intermediate) and the monotributistas (formal evaders).
The tributary Caesar LitvinCEO at LL&A Studio and full professor of Tax Theory and Technique The UBA continues to believe that it is a good option for small merchants and entrepreneurs, in trades and professionals who are just starting out. “It is a privilege to be included in this regime because they pay a low fee that includes VAT, Profits, they have social security and retirement, but the most serious distortion is that it is not a transition, but rather the people for whom it was designed stayed to live in the monotax,” he explains. This generated a trend of systematic under-declaration of income and since there was no bridge for those who went to the self-employed regime, it became a feared leap into the tax void. ““We do not have to eliminate it, but rather modify it so that this change is not so burdensome: the monotributista pays less than the self-employed and almost receives the same benefit,” he adds.
Under the magnifying glass. The researchers Laura Caullo and Guadalupe Galíndezresponsible for the Social-Labor section of the IERALanalyzed its fiscal impact and the viable reform alternatives that exist. The tax component of the monotax is organized into 11 categories according to gross annual income (and in the case of locations or provision of services, in 8 brackets). In November, the corresponding amounts started at $4,183 per month for category A and reached $306,724 per month in category H, but 80% of those registered are concentrated in the three lower categories, with few recategorizations and little migration towards the general regime (“Registered Responsible Persons”). “This dynamic led to phenomena of under-declaration and chronic permanence in the lower brackets, known in the literature as ‘fiscal dwarfism’, with a direct impact on the VAT and Profits tax base,” they detail.
Furthermore, they observe that the monotax regime shows an aging process. “The low participation of young people indicates that the gateway to the labor market is no longer this regime, but rather informality, and meanwhile, the bulk of contributors are concentrated in the most productive age group, between 30 and 49 years old, which explains almost half of the total number of adherents,” he analyzes.
For his part, the economist IDESA Jorge Colinabelieves that the criticism of the monotax is pertinent, but its eventual replacement by another tax has to be carefully designed because otherwise informality may intensify. ““By exploiting the information currently available to ARCA (the electronic invoice), we can move towards a single tax on personal income that is applied with homogeneous criteria to all workers, both salaried and self-employed,” keep it up. In his opinion, one solution is to create an income tax that absorbs the personal contributions to social security of employees, the personal contribution and income tax of the self-employed, and the monotax: that is, all workers – both employees and self-employed – are subject to the same tax. “The design of the personal income tax must contemplate a non-taxable minimum and progressive rates that grow with the person’s income level.he adds. With respect to VAT, it suggests that a minimum amount should be stipulated where adhesion is voluntary (for small merchants and service providers) and from that amount onwards, adhesion is mandatory with automatic settlement also by ARCA based on electronic invoices.
Sentenced to the minimum. The other weak flank that was growing is the gap between contributions and pension benefits of the monotax regime. For the economist Julian Folgarprofessor of public finance at Sciences Economics-UBA, They contribute very little to the pension system and make an astonishing account: cWith the amounts, 19 average monotributistas are needed to pay 1 minimum retirement (and without bonuses). Of the total, only 2.5 million contribute to the pension system, the rest (4.9 million including those from the social monotribute) only pay the tax component.
This mismatch was observed a long time ago by the IMF sleuths every time Argentina asked for a bailout and they looked for lines where to apply the red pencil. Now, again, the flip side of the millions that guarantee exchange stability for the moment is to modify this regime so that it is less burdensome and, above all, that it does not become a beacon of tax avoidance. Eduardo Levy Yeyati highlights this, but warns that said body did not ask for its elimination but rather to “harmonize the monotax rate and improve the transition of small taxpayers to the general regime”, something sensible given the gap with the self-employed. While the contribution to the system is between 5% and 7% of income for monotributistas, their self-employed peers pay between 21% and 31%, for the highest categories. Not for nothing, according to the figures that the consulting firm worked on Centralpyme, while In 2012, there were 22 monotributistas for every 100 private employees, currently the proportion is 44.5. A duplication that invites us to reformulate a system that popularized tax inclusion, but, as Caullio and Galíndez insist, could encourage the mirage of “I pay my taxes.”
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