The fiscal transparency promoted by Lógica Asociación Civil is a necessary advance, but insufficient in the face of a deeper problem: How can we ensure that the consumer directly perceives the benefits of lower rates and taxes in the prices they pay?
When a municipality reduces rates, simplifies procedures or eliminates administrative costs, common sense would indicate that prices should accompany this relief. However, in cases where these policies were applied—such as Capitán Sarmiento or Tres de Febrero— There is no evidence that local businesses have passed this reduction on to consumers..
Conversely, in municipalities where rates increased—Pilar or Lanús, for example—prices did rise, accompanied by business campaigns that explain the impact of these increases and a communication from the municipal State justifying the reason for said increases. The paradox is evident: the mayors who raise taxes communicate and justify; those who lower them do not demand with the same intensity that prices fall.
Economic theory and Argentine reality
If there were a direct correlation between regulations, municipal taxes and final prices, any variation should be reflected in the counter prices. But that only happens in competitive markets.
The Argentine economy, after decades of little competition, presents sectors with oligopolistic dynamicswhere few actors concentrate power and maximize profits without competitive pressure. In this context, expecting that a tax cut will automatically translate into lower prices is illusory.
Fiscal transparency illuminates the actions of the State, but is not enough to illuminate the behavior of price makers.
The consumer, always at a disadvantage
The consumer is the actor with the least bargaining power. It does not set prices, it does not negotiate rates, it lacks bargaining power and, in some areas, it cannot even choose between multiple bidders. Fiscal transparency is a step forward, but does not by itself correct the power structure that defines prices.
Logical Taxes = Logical Pricing: an equation that requires commitment
For the principles of Logic – Logical Taxes, Logical Spending, Logical Prices, Logical Country – to be translated into concrete benefits, the private sector must accompany with facts:
- Reduce prices where taxes are lowered.
- Encourage the transfer of sales to municipalities that alleviate the tax burdengenerating territorial competition.
- Help demonstrate that lower taxes can increase revenueby boosting economic activity.
Without that commitment, Lógica’s goals will remain valuable, but incomplete.
*Juan Carlos Soldano Deheza is an economist.
by Juan Soldano Deheza
