Surely don’t be something so linear, since there are nuances and circumstances that can affect each taxpayer and their family group, but the unfortunate phrase of the Minister of Economy, Luis Caputo, that taxpayers would have to part with their dollars to pay taxes may be partly true.
And it is that the The restoration of the Income Tax for the fourth category will somehow affect the consumption of the middle class or their ability to save, It depends on each case. Logic dictates that if a tax on wages is raised, the affected person will have less money in his or her pocket the following month.
The question then becomes to determine how much of that money was spent on consumption and how much on savings. Whether it was shared between both options or whether it was only for consumption.
The reality is that when Last year, former Minister of Economy Sergio Massa ordered the AFIP to tell companies to stop withholding a portion of employees’ salaries, the intention was “put money in the pockets” of the middle class so they could consume.
Now, The operation is the other way around, it is supposed to “take money out of your pocket”. But the restitution is not exactly the same as before, the economist warns. Nadin Argañaraz: “This year’s tax is much more progressive than last year’s.”
“The tax will now have to be paid pay those who earn more and there is not necessarily a direct relationship with consumption Because the higher the income, the lower the propensity to consume and the greater the propensity to save,” explained the economist.
In this sense, Argañaraz considered that “Perhaps the result may be less savings. and not lower consumption”, which is why he considered that “it is not a direct relationship”.
On the other hand, the owner of the Argentine Institute of Fiscal Analysis (IARAF) He pointed out that “it is not the same counter-reform” that is being done now.They carried out a reform of 0.9% of GDP and now they are recovering, with luck, 0.5% of GDP. Now they are going to charge those who earn the most for that impact in consumption a priori it would not be so significant.”
For its part, Martin Kalos, Director of the consulting firm Epyca, It states that the restitution of the Income Tax affects the middle class population that is on a borderline between “who spent most of it on consumptionand now they are going to have to adjust a little, and another that was allocated to savings”. “The key is to think about family sizes and living standards. A family of 5 living in a country house is not the same as someone who pays the tax living alone.” “Even if the deduction exists, that always has an impact. But The truth is that there is a one-time jump from one month to another with less disposable income. And that will be felt in their pockets, whether they save it or spend it,” he explained.
Alejandro Pegoraro, from Politikon Chaco, has a similar opinion: “It affects both cases but surely more affected in consumption for those who are close to the base and in savings for those who are furthest from the base, although it is difficult to quantify how much in each case.”
Earnings: the effect begins to be felt in September
After the somewhat bumpy start of August, the salary deductions for the first month in which the new system will be fully operational will also serve to make some corrections.
The thing is Companies had to start discounting salaries for July, approximatelybecause when the time came to make the settlements, the new categories and rates were not in force.
So several companies had to make those discounts without being clear about what the exact proportion was, so now with the salaries that are paid in September, the corresponding adjustments may be made.
Deductions per day
By this point, the reached They should have already declared their 2024 deductions to the AFIP. The process is important, because that will not be touched until June 2025. That determines the tax accrued, and in the case of those who continued paying the so-called Cedular Taxwill determine whether the company deducted too much or too little this year, in light of the new law.
Source: Ambito
