The Government is waiting for 2025 a strong recovery in consumptionaccording to the message he sent to Congress this Wednesday with the advance of some points of next year’s budget and details the numbers expected for the end of 2024.
In the advance for the legislators, the economic team estimates that the collection of the Value Added Tax (VAT) will grow 62.5% compared to 2024. That implies a increase of 17.5 percentage points with respect to the inflation projected by the International Monetary Fund (IMF) for Argentina, which is 45%.
So from there it could be inferred that The Government hopes for a firm recovery of the economy next year. “The increase in this tax will be driven, mainly, by the increase in consumption in nominal terms and the Greater banking of the economy. In terms of GDP, VAT net of refunds will increase by 0.23 points compared to 2024″the report details.
Forecasts for VAT and PAIS tax
The text clarifies that the VAT from 2025 will improve compared to 2024, because last year customs refunds were paid for 2023, which will not be paid in the next fiscal year.
Next year, on the other hand, they will enter full validity of the reforms of the Fiscal Packageand as anticipated in its message, the Executive Branch announces that will not renew the COUNTRY TAX when it expires on December 31st.
In this way, a Rebalancing incomeThe funds that will be lost by not having the tax on the purchase of dollars will be compensated with the Income Tax, which will now again have the fourth category, money laundering and moratorium.
Earnings and Personal Assets
As for Earnings, lTax collection would increase by 47%. If the IMF’s inflation estimates are met, then this tax will have virtually no growth. In fact,The government acknowledges that it will record “a decrease in terms of GDP of 0.28 points.”
“The projected increases in prices, the exchange rate, wages, imports and the growth of taxes determined for fiscal periods 2023 and 2024 have a positive impact on the dynamics of this tax, implying an increase in advance payments,” explains the PEN.
But he admits that “The high amount of tax collection in May 2024 has a negative impact on the year-on-year comparison corresponding to the profits of the Companies (mainly in the financial sector) for the financial years ending in 2023.”
It should be noted that this increase in Income was generated due to the strong devaluation of December 2023as companies had hedged their losses with foreign currency assets.
In Personal Property Tax, the government expects to collect almost 62% year-on-year more, due to the increase in the tax base.
While, in contributions and contributions to social security carried out by companies and workers, the government anticipates that will grow 74%although no details are given on the reasons for the improvement, given the increase in unemployment this year. It is assumed that a strong recovery in activity is expected.
The end of the PAIS tax
The Government recognizes that The PAIS Tax will leave you this year with a not inconsiderable income of 1.3 points of GDP. This explains why the Minister of Economy, Luis Caputo, is so reluctant to give details about the elimination that companies are demanding. It is impossible to reduce or remove it without putting the zero fiscal deficit at risk.
That is why, with the fiscal package in full force in 2025, he intends to fulfil one of his election campaign promises.
Given the elimination of the tax, The government estimates that tax revenue will fall by 0.45 points, from 21.6% in 2024 to 21.16% in 2025.
From the difference between the 1.13 point drop in the PAIS tax and the loss of total resources of 0.45 points, The rest of the taxes are expected to contribute 0.68 percentage points of the GDP in higher revenue.
Source: Ambito
