Consumption: VAT collection fell 15.5% real year-on-year in September

The collection of Value Added Tax (VAT) fell by 15.5% in real terms in Septemberwhile that of the Tax on Profits contracted 13% also in real terms, according to private estimates based on funds sent to the provinces through federal tax sharing.

The VAT information reveals that a deep contraction in consumption persists that has not yet been reversed despite incipient improvements in the purchasing power of salaries.

The data corresponds to Argentine Institute of Fiscal Analysis (IARAF), which noted in a report that “together the collection of VAT and Profits would have registered a “real year-on-year drop of 14.6%”. The work indicates that “in the accumulated “In the first 9 months of the year of the sum of these taxes, the real interannual variation would have been negative by 11.2%.”

For its part, the consultant Politikon Chaco estimated a “decrease in Income Tax (-13.1% real) and Value Added Tax (15.6% real). “Real decreases are also observed in Internal Taxes (4.6%) and in Other Co-Participated Taxes (8.9%),” indicates the consultant.

In that way, AFIP income continues to follow the same path of deterioration that it shows throughout 2024, with the exception of May, which had an increase due to the extraordinary collection of Income Tax from companies, which reported strong exchange profits in 2023, due to the December devaluation.

This Tuesday On October 1, the AFIP will announce the total tax collection and social security, where the impact of the reduction of the PAIS Tax from 17.5% to 7.5% will already be felt. That would imply a loss per month of about $200,000 million.

The September data indicate, on the other hand, that the inclusion of the fourth category in the Income Tax, for salaries starting at $1.5 million in hand since August, had a relative effect on income. Salaries that were collected at the beginning of this month have already received the first discounts.

On the other hand, The September tax collection data is closely followed by the market. In principle, a drop in income forces us to follow the rule of adjusting spending more to sustain the surplus. Apparently, as anticipated by the Secretary of Finance, Pablo Quirno, in the month ending this Monday, favorable data was also recorded regarding the cash-based Public Sector accounts.

The affected provinces

Politikon Chaco points out that “the automatic transfers of resources of national origin (co-participation, special laws and compensation of the Fiscal Consensus) sent to the consolidated provinces and CABA totaled about $4.3 billion in September.”

“In the comparison against the same month in 2023, they show a nominal variation of 203.1%. When discounting the inflation of the month of analysis, the real interannual variation showed a drop of 2%. Calculated at current prices, this contraction generated resource losses for the consolidated provinces and CABA for $89,799 million compared to September 2023,” says the consultancy.