With the reduction of retentions the government of Javier Milei It begins to “spend” part of what could be defined as “Fiscal Buffer” that prepared to attend claims from different sectors and achieve support to advance with your “chainsaw” policy without affecting the final result.
He fiscal cost of the retentions reduction would be 0.1% of GDP, between US $ 500 million yu $ S700 million, According to economist estimates Fernando Marullwhich “does not compromise the Primary surplus tax goal of 2025 of 1.6% of GDP ”. For its side, Hernán Letcher of the Argentine Political Economy Center (CEPA), states that “it is between 0.19 and 0.22%” of the product. In the same way, Jorge Colina of the Argentine Social Development Institute (IDESA) A similar magnitude estimates.
But what must be taken into account is that The real goal agreed this year with the International Monetary Fund (IMF) is 1.3%. The difference of 0.3 points was added by President Javier Milei at the time of submitting the agreement with the agency. The aggregate can be considered as a “buffer”, A kind of fiscal mattress which guarantees 1.3% against eventuality.
The Government assumes that, keeping the expense at the end, It can overcome the agreed target With the organism with headquarters in Washington. Already in the first quarter, the 0.3 points of more got them. You can appeal to that pay certain political costs and avoid losing the goal.
Milei’s government shows some flexibility when in front has a social actor that claims and has a capacity for damage, either in politics or economic.
For example, according to data from the Argentine Budget and Public Finance Association (ASAP), the Transfers to the provinces have been uploading This year until the first semester the 95% real, while Universities 3.1% real respect of 2024. In the case of Social Security benefits fall 34% real. The first two sectors have some power to politically press the government, while the third, retirees, lack it.
By granting the field a reduction of retentions, which arise as permanent, decompresses a situation which was presented as risky in political terms, and a very low cost.
How can the fiscal impact of the decline in retentions be compensated?
For Nadín Argañaraz, head of the Argentine Institute of Fiscal Analysis (Iaraf), If after the tax reduction “Increase the tax base by around a fifth, the fiscal cost tends to be null. ”
Argañaraz points out that a reduction of withholdings implies “a price rise, which a priori means a loss drop or a profit rise deriving in a possible greater collection of the tax on profits and other provincial taxes ”.
The analyst recalls that in 2008 the withholdings came to represent 3.17% of GDP, while now in the last 12 months it reaches 0.95% of GDP.
Strictly Doubts can still be raised about whether aliquots reduction soy producers win money or if they are still negative profitability. There are some projections that indicate that the average will lose less.
Alejandro Pegoraro: “The desktop is a tool to negotiate”
Alejandro Pegorarodirector of Politikon Chaco, ensures that “the over-metha that in principle sounded that the Cancheros were being made is a discursive tool to negotiate.”
“The goal, from the first moment, was used as a margin to comply with the IMF and be able to give political negotiation signs,” he explained.
Next week the Chamber of Deputies will begin to analyze the projects approved by the Senate that will be vetoed by Milei and from there it will be seen what could be the cost to be paid for Milei to maintain the fiscal order and avoid the insistence on the Legislative Power.
Pegorao pointed to the scope that the attention will focus on the Total ATN delivery project, which has a cost of 1 point on GDP, or that of Fuel taxeswhich will have another cost of 0.35% of GDP.
An exit so that it does not advance with retirement would be that there will be a new batch of transfers of public works transfers to the provinces, In this case, that the Government transferred the money to the governors to maintain the routes.
Thus, the National Government would ensure the conditions to meet the fiscal objective signed in April with the IMF, beyond then aspiring to maintain 1.6% of primary surplus that announced in April.
Source: Ambito
