Since the essayist Nassim Taleb popularized the term “black Swan” To refer to those events that suddenly change the economic scenario, we Argentines feel like we have been forerunners of a trend for a long time. Once again a surprising event appeared: another war and this time, coming out of a pandemic.
It was not the first and, unfortunately, it will not be the last time that a military conflict appears. But what sets others apart is the impact that ended up pushing the global economy, which was already showing signs of “overheating” after the emergency expansion. “The invasion generated a global economic impact in at least three ways: inflationary pressures caused by the strong increase in commodity prices, financial turmoil and trade disruptions.”, states the latest report from the consultancy Ecolatina.
Vertigo. Argentina was no exception and after a drop of almost 10% in 2020, its economy recovered almost completely last year, with a statistical drag that predicted a floor of 4% for 2022. Inflation, hidden behind price controls and the anchoring of repressed variables, began to escape during the first four months, with an accumulated 22% counting private estimates for April.
For some, it was an inevitable overflow to correct the imbalances of almost two years of distortions in relative prices. For others, the imported “inflation” of primary goods, the result of the pull, weighed much more heavily than the Russian invasion of Ukraine.
What is certain is that in order to apply a fiscal correction that tames an increasingly unruly CPI, the priority is to close the deficit. And for that, there are not many paths: lower expenses or raise tax collection. The first is being achieved with liquidation thanks to rising inflation: retirees, contractors and public employees are running behind the prices. But it’s not enough. Then, the idea of taxing “one time only” the supposed extraordinary income that produced the global economic scissor was seized upon. would become, according to Argentine Tax Vademecuman exhaustive analysis of the Argentine Institute of Fiscal Analysis (IARAF), in the tribute number 166 of the Argentine legislation.
Alert. The alarms went off in the sectors that they suppose would end up as taxpayers, a praxis that the economic policy of the last two years ended up validating crazy ideas of legislative snipers. And the first argument was precisely the excessive tax pressure in addition to the amount of existing taxes. just the economist Nadin Arganaraz, director of the IARAF, maintains that the amount of taxes (which are taxes, rates and contributions, both at the national, provincial and municipal levels) should not be confused with the tax pressure, defined as the relationship between tax collection and the gross domestic product of a country. “There could be the hypothetical case of a system that works with very few taxes but still drowns the taxpayer,” he clarifies.
The curious thing about the radiography carried out by the IARAF is that between 12 taxes they manage to concentrate 91% of the total collection, while the other 153 distribute only the remaining 9%. Among that dozen that collects the most, there are 10 of the national order (including VAT, contributions and contributions to social security; profits from companies and on individuals, among others) one provincial (Gross Income) and one municipal (the tax rate). Health and Safety inspection).
Argañaraz observes that in the face of infrequent situations that occur in the world (war, pandemic, etc.), changes in relative prices, income transfers, inflation are generated, “which deserves a serious social discussion to see how they can be faced. And that happens in any country in the world, also in Argentina. It is clear that it is necessary to continue generating revenue and that unleashes a great debate anywhere, ”he says. For his part, the economist Roberto Vassoloprofessor and researcher IAEadds that the problem is not the number of taxes per se, but the complexity of their application, which generates, especially for SMEs, an extra workload and less focus on their business.
Abuses. To aggravate the panorama, inflation can be added, already thought of as a tax on credits or immobilized balances and that some estimate between 3 and 4% of GDP, according to the sector and the rate of increase of the CPI. “Expenditure is already close to that of developed countries, so the gap with collection has to be covered in some way: issuing or borrowing,” he deduces. However, he believes that the worst thing about the Argentine tax system is that by design, the tax pressure on companies is very high and that “dynamits their regional and global competitiveness.”
Risking a dynamic factor, he stresses that this pressure ends up constituting “an enormous barrier to increasing investment and improving quality employment. It is not definitive, because other additional measures are needed, but it does not collaborate”, he concludes.
the tributary Cesar Litvin refutes the main argument of “unexpected income” and maintains that the discussion that is generated opens a space for reflection on the relationship between the State and taxpayers. “In the first place, it must be remembered that there is already a rate levied on company income and it is 35%, but it reaches 39.55% in the case of distributed dividends, which already gives the State a percentage of that possible additional utility”, he reasons. It also adds the fact that many of the sectors that supposedly benefited from the volatility of some prices have not necessarily been favored because it is necessary to consider when the sales were made, the rise in international costs and, in addition, perhaps the good This year’s luck serves to mitigate previous bad streaks. “Business activity is also full of unexpected losses,” he emphasizes.
Second, Litvin points out that the rate at which company profits are already taxed is one of the highest in the world and is at the top of the region, according to the latest study carried out by the World Bank: the world average is 41% and the Argentine State takes 106% of the total profits. And to all this, he adds the traditional mistrust about the efficiency in the use of the resources obtained by the different governments with what they collect, which feeds the resistance to continue increasing rates or expanding the number of taxes. “Their proliferation is also an indicator of the inefficiency of the administration because that amount is needed to be able to collect more,” he concludes.
The future. This time, the commitments made with the IMF will lead to a debate on the need to increase collection. For large companies inserted in the global economy, su Greater exposure will feed the work of its teams of accountants and lawyers who are experts in avoidance and also of professionals seeking agreements that act as tax umbrellas. For the smaller ones, lacking this type of official advantage, it would be an invitation to increase their degree of informality to cushion the impact of the growing tax pressure. The productive pulley to generate employment will be left for another occasion.
