In our country, it is demonstrated by very close examples that lowering taxes does not lower prices.
We have been hearing for almost 2 months now that the government is going to do what it promised in its electoral campaign, that is, lower and eliminate taxes. To do this, they would start with the COUNTRY TAXThey state and say loudly that they will begin to lower the tax from 17.5% to 7.5% and eliminate it next December; all of this is a complete lie because the aforementioned tax was created on December 20, 2019 for 5 calendar years with a general rate of 7.5% and for digital services of 5%.
On December 12, 2023, that is, 2 days after the current government took office, the Minister of Economy Luis Caputo announced that from the following day the tax would be raised to 17.5% in general and 8.5% for digital services/platforms.
By this we mean that they are not doing anyone any favors, much less lowering the tax, but the only thing they are doing from today is only lowering it to the initial level of their “own” government for some raw materials/inputs. Because for what is paid for digital platform services, it is still 8.5% and the rest of the purchases are 17.5% (this includes payments abroad with credit cards and/or dollar purchases for savings).
Therefore, the PAIS tax will never be eliminated this year, but rather the original validity of the Law will end, and we will confirm this in the next 2 weeks since the 2025 Budget must be presented before September 15, and if it does not request an extension, the exceptional nature of the law will have been completed for the only time in Argentine tax history.
In our country, it is demonstrated with very close examples that lowering taxes does not lower prices. Clear examples of this are the last 2 times that VAT was lowered (both in 2002 from 21 to 19% and from August 15, 2019 to December 31, 2019, bringing the basic basket to 0%), making the VAT refund in their savings/current accounts much more effective and/or visible to the population because when made through debit cards and/or QR payments, it generates a higher level of formalization of our economy.
From today we will find that there are many importers who delayed their purchases from August to September as a result of which they had to pay 10 points less of the tax and consequently the national tax collection will fall because of it since it was the shining star of the same, with months of $500 MM out of $7 BM monthly in total. It should be noted that this decrease in raw materials will result in many companies importing steel, aluminum and other metals from abroad because it is cheaper to import it than to produce it.
We must understand that Argentine economic groups will become mere importers of this, which will end up closing their local plants and leaving only offices to carry out imports from their other production plants in Texas (USA) and/or China. Obviously, this will generate many more unemployed people than the 10% and indigents of the 15% that we have today, because the last known data is from last March.
These types of reductions must be made when the national industry is strong and growing, otherwise the elimination of the mismatch between local and international prices will generate a return to the wild capitalism of the 1990s first and then a return to 1925-1930, more so in a time of self-generated economic depression since December 12, 2023, like the one we are experiencing.
With this data we ALWAYS close by lowering the total inflation to the inflation in dollars at 4% monthly, which leads to a 60% annual base with a lag in the exchange rate as we find ourselves today again, which is evidenced both by the requests of the IMF and the field in the need to depreciate the currency from $970 to $2,000, which would mean that this government would lead our country to be Venezuela with a poverty rate close to 90% in 4 months, fulfilling what was expressed in the inauguration speech of the current President when he said “…I have no problem sending 90% of the country’s population into poverty…”. That is why he expressed in April 2023 that “any idiot lowers inflation with a recession.”
Source: Ambito
I am Pierce Boyd, a driven and ambitious professional working in the news industry. I have been writing for 24 Hours Worlds for over five years, specializing in sports section coverage. During my tenure at the publication, I have built an impressive portfolio of articles that has earned me a reputation as an experienced journalist and content creator.
