The project of “Law of Bases and Starting Points for the Freedom of Argentines” (the Project) contains a chapter on “Consumer Fiscal Transparency Regime.” But, perhaps due to an inadvertent omission, the consumer tax transparency rules were not included. President Javier Milei signed a commitment to promote this norm. But until now the ruling party would not be honoring it substantially, there being a golden opportunity to sanction said norm.
2) the incorporation of two articles to the Consumer Protection Law so that sellers (except SMEs) report the approximate value of national indirect taxes (in addition to VAT), provincial and municipal taxes that affect the formation of prices; optionally, also direct taxes.
3) for state benefits or services, the requirement that instead of “free” the term “free access paid for by taxpayers’ taxes” be used.
Standards 1) and 3) were included in the Project. Rule 2) was not included, being precisely the substantial one.
Why these rules? The three have been central proposals of Logicaccording to our networks (@paisconlogica), under the understanding that one of the main causes of the Argentine fiscal tragedy is the lack of fiscal culture in our entire society, generated by a regime that systematically hides taxes from citizens.
The direct form is in article 39 of the VAT Law with the shameful prohibition of showing that tax to the consumer, which is 50 years old. The other consists of hiding indirect taxes behind the seller’s “tree”, transferable to the citizen, namely: Nation, in addition to VAT, with the check and internal tax; the provinces with gross income; and the municipalities with their rates. If applicable, others such as import and COUNTRY. Without almost anyone knowing.
Consequences? The lack of awareness and the non-involvement of Argentines in fiscal matters means that we do not demand that the political class behave in spending and taxes, generating a fiscal tragedy. That does not happen in issues such as the consolidation of democracy and gender equality because there we do get involved, we demand and our tolerance tends to zero.
How can we not only get out of the fiscal tragedy but also maintain ourselves in the long term? Action number 1, making the citizen aware with the most transparent tax information system for every time he consumes. A tool with immediate effect from its validity, with reach to the entire population, with impact on the pocket and with a low implementation cost. The ticket, but much more than the ticket.
Why exposing only VAT is not enough? Because it’s less than halfway there. For example, in beverages, the weight of taxes in the final price is 48% (IARAF). Almost one product for himself and another for the State. VAT represents only a third of that burden. Another third are the other indirect taxes already mentioned and the remaining third are direct taxes (profits and social security). These last two thirds are the most invisible. The regime must prevent hiding not only VAT but also other taxes behind the seller.
Has such a transparency regime been applied in any country? Yes, in Brazil, law 12,741 of 2012 is still in force. In ‘normal countries’ only VAT is shown, as it is the only tax on the consumer. But Brazil needed to stop all its ‘fiscal madness’, similar to that of Argentina. Thus, it required that the tickets contain “information on the approximate value corresponding to all federal, state and municipal taxes, the incidence of which influences the formation of the respective sales prices.” It makes no difference whether they apply to the seller or the buyer. Up to 8 indirect taxes are considered, similar to those mentioned above for Argentina. They are presented by total and subtotals by Nation, province and municipality. The system that we have been proposing since Logic (petition on Change.org, press, networks, etc.) is similar to the Brazilian one, plus the option of adding direct taxes (included in Brazilian law but ultimately vetoed).
Is it very difficult to calculate? No. In fact, IARAF, ADEFA, Estudio Fargosi, CAME, etc. have been calculating it for years for around twenty different products. The key, as in Brazil, is not to get complicated and that the calculation is “approximate.” Because the purpose is not for the citizen to receive a payment on account of taxes but rather to raise their tax awareness. It doesn’t matter if the tax burden is 48% or a couple of points more or less. The relevant thing is that you know that it is not 0% or 21% but more than double that.
Is it difficult to implement? If Brazil implemented it having the -by far- most complex tax system in the world (World Bank), for Argentina it should be much less difficult. In the end, it is about downloading data from a table updated by sector and location of the premises.
What benefits would this regime have? As in Brazil, multiple: 1) by removing the veil of hidden taxes, 46 million Argentines will know the whole truth; It will be shown and you will know how they go down (or up) with each sanction; 2) upon becoming aware, we get involved and demand rationality in taxes and spending; also appropriate State services; 3) from the politicians, they know that if they create taxes, they go to the ticket, to the media and in the end it remains at the polls; vice versa with casualties; 4) if the Nation began to lower taxes but provinces and municipalities began to raise them, nothing would change for the citizen; With this system, increases are discouraged and subnational cancellations are encouraged; 5) the tax discussion at the political and media level changes 180%: it is no longer viewed only from the businessman but from the citizen, etc.
What is the signed commitment? Logic proposed that the 5 presidential candidates sign a commitment to promote “a rule of fiscal transparency for the consumer that makes visible on the ticket or invoice the VAT and other national, provincial and municipal taxes that are applied to the purchase amount”, after explaining the issue and the Brazilian model. President Milei signed it, as did Bullrich and Schiaretti. For now the ruling party would be honoring it only in relation to VAT, as if we were a ‘normal country’. But we are the most burdensome in the world, so it remains to comply with it in relation to all other taxes.
It’s the moment? Beyond the commitment, it is a golden opportunity for the ruling party to use the silver bullet of raising fiscal awareness among all Argentines, immediately. The tax cuts could come from the ruling party, yes. But demanded and supported by the people. Therefore, it is expected that this perhaps involuntary omission will be amended sooner rather than later during the parliamentary process.
Conclusion: Within the framework of the undoubted cultural change that the president has generated in society, the momentum should be taken advantage of and this norm promoted to generate a fiscal culture in the short term. And so that, beyond the ruling political sign, the fiscal issue will never again be locked in the political labyrinth, but rather becomes a citizen issue for Argentines.
President of Lógica, an NGO dedicated to generating fiscal awareness in society.
Source: Ambito
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