It will aim to eliminate or reduce tax exemptions. Fiscal spending in Argentina is $6.2 billion. According to an IARAF study, to achieve balance, next year’s adjustment would have to be 3.7% of GDP.
Government will present the 2024 Budget project to Congress this Friday, which, as anticipated a month ago by the Minister of Economy, Sergio Massa, It will be premised on “zero deficit” and the cutting of what is called “fiscal spending” to achieve it.that is, reduce or eliminate exemptions or reductions in the payment of taxes established by laws or by incentive programs for some economic activities.
Although the current agreement with the International Monetary Fund (IMF) states that 2023 must end with a primary red of 1.9% of GDP, all analysts predict that the goal will not be able to be achieved, and that the number in reality This year it could be between 2.4% and 2.5%.
Going forward, an Iaraf report estimates that total revenues in 2024, With the current tax structure and economic activity similar to that of 2022, they would amount to $29.35 trillion, equivalent to 17.6% of GDP. Projected primary spending would be $32 billion or 19.2% of GDP. Therefore, the projected primary deficit would be $2.6 trillion (1.6% of GDP). The interest on the debt would add another $3.5 trillion, the IARAF estimates, so the fiscal deficit would be $6.16 trillion (3.7% of GDP).
The report considers, on the expenditure side, that the same cuts scheme that the Ministry of Economy has been carrying out since Sergio Massa took control of the portfolio is maintained. On the income side, it is proposed hypothesis anticipated by the Treasury Palace of going for the cut of the benefits enjoyed by some sectors who do not pay taxes at the same level as the rest of society. This is what is called “tax spending”, which consists of tax exemptions either determined by law or by promotion programs for some sectors. The IARAF study indicates that the Nation stops collecting resources worth $6.2 billion a year through this means.
The doubt lies in anticipating where the scissors will pass, taking into account that the Government proposes taking benefits only from large companies.
According to the details provided by the IARAF, Due to VAT, the national government and the provinces (since it is co-participatory) stop receiving $1.47 billion. This includes food, medical benefits, housing construction, educational services and others. For Income Tax, judges do not pay $258,697 million in taxes per year; foundations and associations, $113,177 million; and the workers of Patagonia, $64,673 million. Due to the Fuel Transfer Tax, which is also shared, the south of the country benefits with $371,868 million, while the reduction in employer contributions by geographical area implies for the Nation to give up resources $646,627 million (not shared with the provinces). On the other hand, the exemption of deposits of Personal Property costs $323,363 million.
The industrial and activity promotion regimes cost the national State and the provinces a total of $1.45 billions, among which are the electronic industry of Tierra del Fuego, mining and the benefit for micro-SMEs that allows 100% of the check tax to be computed to employer contribution accounts. Other benefits involve $776,072 million in Personal Property exemptions for rural real estate; $436,540 million for deferral of VAT for SMEs and $307,795 for reduction in employer contributions derived from the 2017 tax reform. The report states that everything that cannot be eliminated from tax expenditure requires the next government to make a higher level of spending adjustment.
Source: Ambito
