Javier Milei’s victory in the runoff opened the door to a change in the political paradigm in Argentinagiven that it aims to implement radicalized neoliberal policies and champions two basic principles: that of economic freedom and the right of private property. They are traditional concepts of capitalism, but what you propose is to apply them in their maximum expression to the detriment of the role of the State, whose structure it seeks to reduce. In fact, he announced a spending cut of 15 points of GDP. And, in this scenario, there is great expectation about what he will do in tax matters.
“Accountants are waiting for good news for our clients.who are the taxpayers,” he points out in this regard to Ambit he tributary Santiago Sáenz Valiente. And it indicates that Milei He said repeatedly that he “embraces the ideas of freedom, but also of Right to private property” and, in that sense, he trusts that he will advocate for combating the confiscatory effect that he attributes to the local tax system.
Sáenz Valiente points out that the property right It is established in article 17 of the National Constitution and ensures that this section of our law was fundamental for the legal cases that were initiated against the Extraordinary Solidarity Contribution. Many of those who opposed paying it alleged that principle against the Government’s demand.
Argentina comes on a totally different political train, with a conception of a State that seeks to contain and meet the needs of the most needy sectors of society and in which taxes have often been safe passages to achieve this.above all, in the face of adverse economic circumstances, such as the drought, which this year reduced the forecast for income from exports from the countryside by around US$20,000 million, or the pandemic, which affected activity and generated strong damage to the economy. .
Taxes and the right to property
This leads to high tax pressure and Saénz Valiente objects that “the tax overload that falls on the taxpayer violates the property principle because they apply many taxes at the same time on a single contributor base.”
In that sense, many specialists in tax issues hope that the imprint of the new Government, with a critical look at the role of the state as regulator of the economy, will bring a change in that sense. Such is the case of Daniel Lejtman, independent professional expert in tax issues, who hopes that “Milei implement a tax policy very different from the current one” and more focused on reducing the amount of taxes.
He considers that lowering some rates is beneficial “in pursuit of encourage production and encourage investment”. And, along those lines, he believes that the Personal Property Tax and discard everything that affects local production, for example.
On the other hand, Sáenz Valiente mentions the importance of promoting equity in the treatment of taxpayers before the treasury. “The issue of lowering the non-taxable minimum of Profits, for example, is a decision contrary to equity because the Self-employed and professionals, for example, are workers who earn about $2 million per month and end up paying up to $5 million or $6 million annually,” he says. Thus, he considers that the new Government management must address this issue and make some changes in this regard.
Export rights
And, finally, he points out that the Export rightson the other hand, are a tax that They do not exist in other countries of the world and it makes us lose competitiveness. “I think it will be difficult to repeal them suddenly, but that issue should also be addressed,” she says. To which Lejtman adds that “that would be a key step so that we can export with a more competitive offer.”
Tax reductions do not work alone
Thus, everything would indicate, as the tributary Daniel Dubinthat the new government “has a vocation to reduce tax pressure”, but warns that this cannot be done without first shrinking the State. And he warns that “there are many problems in carrying out a profound state reform that allows progress in that direction.”
For him, if progress is made in tax reduction Without taking countermeasures first, the new Government will need additional funding to do it. And the other alternative to compensate for the loss of tax revenue would be monetary issue, which is contrary to its principles and is inflationary. Consequently, all that remains is to seek the injection of funds in some way.
But, on the other hand, Dubin expects that the coming months will be very tense in the relationship with the provinces due to the discussion that was generated around Co-participation and the reduction of taxes, which obviously impacts the provincial and municipal financing. Thus, it warns that it is expected that the provinces will have to adjust their budgets to their provincial resources (because they will not have national funds) and does not rule out the need to some issuance of quasi-currencies by provinces with deficit.
Consequently, Dubin warns of the risks of moving forward with the elimination and modification of certain taxes without a consistent plan and maintains that the Government of Milei You must be very careful when assembling your tax policy. He believes that the following steps should be followed:
- assemble a consensus team to begin the state reform,
- as it goes adjusting the deficit, must begin to repeal distortive taxes (such as export duties and bank debits and credits in the part that is tax credit)
- instrument exchange of tax credit balances for bank credits productive
Without a doubt, it is a whole process that must be put in place to guarantee a efficient change in the Argentine tax matrixwhich must be accompanied by a reduction in spendingas one hears politicians and analysts say a lot at the moment, but also in a greater efficiency in the administration of public spendingsomething that, these days, little is talked about.
Source: Ambito
