Crossing the data on prices and quantities, net of the higher tax contribution, the primary exporting sectors recorded improvements in income ranging from 4% to 25% only as an effect of the war in Ukraine. This is a wide margin that responds to the criterion of ‘unexpected income’ or ‘extraordinary income’. If we look at the collection of taxes linked to foreign trade, there was a significant increase, in line with the better price context. This first quarter, import and export duties are positioned only 14.5% below the maximum of 2008.
Evaluating the theoretical incidence of the new bonus that is going to be granted in May and June, it is possible to investigate, based on data on the distribution of income per capita by deciles, a potential annual improvement between the 23.3% (for decile 1) and 1.4% (for decile 10). Of course, given the definition of the group of beneficiaries, the transfer would not apply to the highest deciles. This result also shows the advantage of granting a fixed sum, which has a progressive effect within the eligible set.
For this 2022, a reduction of the fiscal deficit of half a point of GDP is expected, in relation to the previous year. Compliance will depend on a multiplicity of factors, many of which are still unpredictable, depending on external aspects. In any case, the expansion of transfers to vulnerable sectors does not jeopardize the achievement of the goal with the Monetary Fund in the baseline scenario.
With what instrument could the necessary resources be collected for the application of the new bonus?
- The surplus of direct collection for taxes linked to foreign trade.
- The implementation of the new unexpected income tax.
- The surplus of indirect collection, given the multiplier effect of the expense after the transfer of the new bonus.
As for the remainder of the extra collection due to the price effect, the details are not yet known, but the marginal rate of income tax on favored sectors due to increased income in the context of war could be increased to 50%. With this set of items, the resources would be collected to finance the new bonus for around ten million beneficiaries.
It is clear that the Government has a short blanket, where a greater compensation to vulnerable sectors threatens the fulfillment of the program committed to with the IMF. The partial transfer of cargo to the private sector, which has been favored by the rise in international prices, seems to be the perfect diagonal to get out of the labyrinth. Standing idly by and not extending coverage to sectors not eligible for other programs seems to be the worst alternative. Not for political convenience, but for ethical consideration at such a critical time for Argentine families, mainly due to external causes.
DDirector of Consulting Sarandí.
Source: Ambito
