A challenging outlook for the districts is presented due to the declines in transfers and tax collection.
According to data published by the Argentine Institute of Fiscal Analysis (IARAF), co-participation fell by 18.5% year-on-year during the month of Augustadded to another fall in the automatic transfers from the Nation to the provinces and the City of Buenos Aires, reflecting 14%. Both CABAas Good Aires and Mendozawere the most affected.
The transfers made by the Government to provinces and the City amounted to a total of $3,746,000 millionwhich includes co-participation, special laws and compensation, and represents a nominal increase of 174% compared to the same period last year.
These data, when adjusted for the inflationary process of the period, show a real decline of 18.5% year-on-year. The cumulative figure up to August of this year totals $25,208,000 million in transfers, and reflects a real year-on-year drop of 14%. This decline is largely due to the poor performance in the collection of key taxes, such as income tax and VAT.
VAT and profits
In addition, the DNAP showed that the collection of Income tax fell by 24% in real year-on-year terms, while the VAT collection experienced a decrease of 11.7% real year-on-year. In composite terms, they show a real fall of 16.7%. In the accumulated annual figure, a negative variation of 9.4% is observed, adding taxes.
Compared to July, the combined collection of VAT and profits, which represents 54% of the total national collection, showed a real increase of 3%While profits decreased by 6.4%, VAT increased by 1.3%.
On the other hand, the automatic transfers of the eighth month of the year, highlighted that a negative real variation was recorded, although with notable differences. The provinces that represented the greatest fall were Santa Cruz and Buenos Aireswith 19.1% and 18% respectively. In terms of revenue sharing, the National Government sent $3,402,000 million in August 2024, which represents a nominal variation of 173% compared to the previous year, but with a real drop of 18.7% adjusted for inflation.
Finally, CABA, Buenos Aires and Mendoza were the provinces that lost the least in terms of complementary laws and compensation, with transfers amounting to $344 billion. In contrast, Catamarca, Tierra del Fuego and Formosa were the most affected. This accumulated real drop would reach the amount in transfers of about $4,771 billion, practically equaling the total amount of transfers for the month of August 2023 ($4,595 billion in current terms).
The IARAF report
Source: Ambito
