He Spending cuts will not end even if the Government reaches equilibrium this year from the State accounts. And this is because the economic team is planning a loss of resources for 2025 due to the elimination and reduction of taxes.
This was anticipated by the Secretary of Finance, Pablo Quirno, in a talk he gave to insurance entrepreneurs at a meeting this week.
“We are not satisfied with this financial surplus. We are going to work to have a financial surpluswith a reduction in expenses, because that will allow me to maintain the financial surplus with lower taxes”explained the official who acts as virtual number two at the Treasury Palace.
In this regard, On September 15, President Javier Milei announced that he will go to Congress to explain the 2025 Budget, which will immediately include the elimination of the PAIS Tax, which represents 6% of total revenue. It is the fifth most important tax in the current tax structure.
Income falls and interest rises
According to data from the Federal Public Revenue Administration (AFIP), The tax charged on the sale of dollars has contributed between January and August almost $5 billion.
On the other hand, it must be taken into account that among the The expenses that will increase next year are those corresponding to the debt of the Capitalization Letters (Lecaps) and the Fiscal Liquidity Letters (LeFi)). It is estimated that Lecaps alone will add another $4 billion in interest expenses.
In the Budget advance for legislators sent on July 4, the economic team estimates that Value Added Tax (VAT) collection will grow 62.5% compared to 2024.
“The increase in this tax will be driven mainly by the increase in consumption in nominal terms. and the greater banking of the economy,” says the official message to the deputies.
He also maintains that “In terms of GDP, net VAT refunds will increase by 0.23 points compared to 2024“
As soon as In terms of earnings, the collection would increase by 47%. If the IMF’s inflation estimates are met, then this tax will have practically no growth. In fact, the government recognizes that it will register “a decrease in terms of GDP of 0.28 points”.
Over adjustment
The aThe fiscal balance for the first 7 months of the year was equivalent, in annual terms, to 5.3 percentage points of GDP, that is, 0.9 percentage points above the 4.4 points needed to eliminate the fiscal deficit. The data is from the Argentine Institute for Fiscal Analysis.
In the first 7 months of the year Total effective revenues fell by 5% in real terms and primary expenditure paid fell by 31% in real terms. Interest expenditure on debt, meanwhile, fell by 4% in real terms.
The equivalent annual improvement in the primary result is 5.3 percentage points of GDP, which would mean going from a primary deficit of 2.7% to a surplus of 2.6% in 2024.
Source: Ambito
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