As a result of the drop in tax revenue, Each inhabitant of Argentina lost about $102,000 in the first eight months of the year due to lower shipments from the Nation to the provinces in the form of revenue sharing.
This was estimated by the Argentine Institute of Fiscal Analysis (IARAF) In a recent report, which states that “in the first eight months of the year, the real drop in automatic transfers to provinces and CABA is equivalent to $4.8 trillion in August 2024 currency.”
“The largest jurisdictions are those that record the greatest loss in absolute value. If the loss is relativized by dividing by the number of inhabitants, so as to approximate the loss per capita, The three most affected jurisdictions were Tierra del Fuego, Catamarca and Formosa, with $284,000, $276,000 and $260,000, respectively,” the report states.
The consulting firm headed by economist Nadin Argañaráz indicated that, “At the other extreme, the inhabitants least affected by the real fall in shared tax collection were those of the City of Buenos Aires, the province of Buenos Aires and Mendoza, with per capita losses of $27,000, $65,000 and $89,000.”
By dividing the total sent by the Nation to the 24 districts, it emerges that, in So far this year, each inhabitant in the country has lost $102,269.
In absolute numbers, the province that is being most affected by the negative fiscal picture is Buenos Aires, which has been losing $1.1 billion so far this year, compared to the same period in 2023.
In addition, there are fewer discretionary funds
To this loss, we must add the Fall in non-automatic transfers due to political decision of the Government. In the first eight months of 2024, non-automatic transfers to provinces and CABA totaled $645,288 million in the accrued stage and $527,179 million in the paid stage. These figures are equivalent to a real decrease of 79.8% and 81.9% respectively, details the consultancy firm Politikon Chaco.
The 24 subnational jurisdictions show real declines in both stages during this period: The lowest are observed in CABA, both for the accrued stage (-41.9%) and the paid stage (-38.6%), while the sharpest drop, also in both stages, was recorded in La Rioja (-96.8% in accrued and -97.8% in paid).
However, when measuring the participation of each district in the total shipments of the Nation, Buenos Aires (43.8%), CABA (17.4%) and Santa Cruz (3.4%) show the highest volume in accrued transfers; and they occupy the same position in paid shipments (43.5%, 17.2% and 3.6%), a situation that is explained by shipments collected for the operation of hospitals.
The most affected co-participating taxes
Tax collection data shows that taxes that are shared with the provinces being hit hard by the decline in activity, especially the Income Taxas a result of the repeal of the fourth category throughout the year, which the Government has now managed to reverse with the fiscal package.
That tax records a real drop this year of 13%. The other tribute is the VAT, which shows a decrease of 10%, and internal taxes that can be shared fell by 20%.
For the Nation, it has been easier to cope with the adjustment because taxes linked to foreign trade, the collection of which is not shared, grew throughout the year. One of the cases is the PAIS tax, with 174% compared to the first eight months of last year. The other case is withholdings, which grew 42%.
Source: Ambito
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