The reform project of Income Tax which will be debated this Tuesday in the Chamber of Deputies would have an approximate fiscal cost of 3 billion pesos, as estimated by the Congressional Budget Office.
A work carried out by the Congressional Budget Office (CPO), an organization that is dedicated to carrying out economic studies of various types and that usually, by mandate, estimates the fiscal costs of the bills that are discussed in parliament, measured what would be the impact that it would have in public accounts.
“For the Treasury, a negative fiscal impact in 2024 is estimated equivalent to 0.30% of GDP ($1.05 trillion at 2024 prices)”, measured the OPC, which also projected that the national Judiciary will have an impact of $100.5 billion (0.03% of GDP), the AFIP others $55.6 billion (0.02%) and funds for National Treasury Contributions for just over $28 billion. Another important task will be faced by the provincesfor an estimated amount in 1.6 billion pesostaking into consideration that Profits is one of the main co-participating taxes.
“The values recorded were estimated for the fiscal period 2024, based on the macroeconomic projections reported in the Project of Budget Law 2024. An average annual variation of the RIPTE of 101.8% year-on-year is estimated in 2024, consistent with the increase in resources of Social Security (+105.2% year-on-year) reported in the Message of the 2024 Budget Bill,” they clarified from the OPC.
“It should be clarified that the impact estimate is first ordersince the effect of the modification under analysis on the collection of other national taxes is not calculated, nor is the possible reduction of effective rates of the Income Tax on other income that the creation of the schedular tax could imply quantified,” mentioned that study, which was cited during the debate in the Budget and Finance commission by the deputy of Together for Change of the Radical Evolution bloc, Alejandro Cacace.
“With these modifications it becomes regressive because there is a point at which the one who earns the most begins to pay less.” The fiscal impact of the elimination of the fourth category will mean a cost of “0.83% of GDP, which will impact collection and later on the income of the provinces.” According to the deputy, the cost until the end of the year would be 375,000 million pesos.
Profits: what is the cost to 2024
The OPC, in any case, made a alternative calculationwhich results in a lower tax cost. “The results were calculated based on a 2024 Base Scenario in which the nominal parameters of the tax remain constant throughout the entire fiscal period. However, in recent years the National Executive Branch Has arranged measures to update certain parameters of the tax with the objective of reducing the number of workers retained due to the increase in nominal salaries throughout the year,” said that parliamentary office.
“If we assumed a Base Scenario 2024 in which the nominal parameters of the tax were updated in the same way throughout the year, and maintaining the calculation methodology described above, the fiscal impact for the Treasury would be 0.24% of GDP”, calculated the OPC.
This would imply, thus, some $852 billion of fiscal cost for the national Treasury (about $200,000 million less than in the first scenario proposed), while for the provinces the collection hole would extend to the 1.3 billion pesossome $300,000 million less than in the most expensive scenario. In total, thus, there would be some 0.67% of GDPeither 2.3 billion pesos.