Bye COUNTRY Tax: the crossroads that the Government faces if it lifts the stocks

President, Javier Mileiinsists that Exchange restrictions will cease to exist under your Government: He set the date himself and it is in the middle of this year. All this, despite the fact that experts maintain that the conditions are not met and that there are some factors that would truncate the total release of the stocks. One of them is the COUNTRY TAXwhich under that logic would cease to exist, but It is easier said than done.

And it is that he COUNTRY TAX It has growing importance in national perception. In fact, the tax contributes 7% of the collection and it is possible that if an annual projection is taken it will be in the order of 1.5% of Gross domestic product (GDP), as indicated by Area Nadin Argañarazdirector of the Argentine Institute of Fiscal Analysis (IARAF).

“Taking into account that the check tax contributes 1.8% or 1.9% of GDP, clearly the collection of the COUNTRY Tax is key,” warns the expert. Argañaraz He is confident that the Government will surely evaluate very well the options it has when it comes to removing the stocks and how the tax plays in the issue of importing goods inputs, “as well as its weight in the purely exchange issue“.

That being said, the question arises as to how the Government to compensate for what you stop collecting with the Country Tax when I lift the trap.

The options that the Government has

Hernan Letchereconomist and director of the Center for Argentine Political Economy (CEPA), indicates in dialogue with this medium that, by lifting the stocks, “there will be some kind of change correction“.

He also considers that by dismantling the exchange restriction “should improve export duties“. He estimates that, as is happening now and until next May, “there will be an increase in the collection of the fuel tax due to the unfreezing of that tax.”

However, he warns that he does not consider that this will be enough to “compensate the weight of the COUNTRY Tax”, but in principle he estimates that they would use these two items. Letcher concludes that “and if not, They will compensate with a greater reduction in spending“.

The “moral” crossroads of increasing other taxes

Just six months ago, the president Javier Milei qualified in a speech as a national deputy for taxes “like a robbery“and crossed out Profits, the tax that weighs on what people earn from their work,”like a delirium“.

In that sense, Rafael Floresa specialist in fiscal policy, assures this medium that in the first two months of the year, the Country Tax collection $814 billion on a total of the collection of $10,690,000.

Flores maintains that this represents “7.6% of the collection so far this year and 11.6% if only tax resources are taken“This being the case, in broad terms it is a very important number in collection, which in fact exceeds Profits in this two-month period. Therefore, “the Government has a serious problem there because it has the objective of lifting the stocks, but lifting the stocks means that the collection will fall by this percentage“Flores warns.

So what can the Government do to compensate? For Flores, one option is the Income Tax. This, he maintains, is due to the fact that the tax on what is received by the workers “is collecting very little from the reform that Sergio Masa (former Minister of Economy) made last year“.

Recompose income on the Profit side I would put the situation back to what it was in the past. and “it would allow the Government to cover part of what it stops receiving from the Country Tax,” Flores asserts.

What other income can the Government touch?

The expert explains that answering this question “It is very difficult“. His argument is based on the fact that Milei’s is a Government that maintains that “does not want to increase taxes, even though it has done so“In their opinion, they surely want to go for some major spending cuts, in line with what Letcher proposes, “but spending has many rigidities where it is not so easy either“, and even many of the announcements that are being made with a more grandiose scheme than in practice”they are not going to reach such significant reductions“.

In this way, it is almost impossible to decipher what scheme the Government is considering, or even what it is thinking about, and that is what generates more doubts regarding sustainability. of the fiscal adjustment that is underway. That is to say, How is this adjustment going to be made sustainable when a drop in income is anticipated, which is already being affected by the impact of the recession?

Since it is unknown what the Government roadmap to see how the fiscal adjustment will be sustainable, the options to compensate for the reduction of the Country Tax They are reduced or more adjustment or more taxes, a moral crossroads that will once again put the president in trouble.