For
William N. Perez. President and Chief Executive Officer of the GNP Group.
Gaston Fernández Celi. NLP Group Director
The Argentine partnership regime It was created in the 30sand it was a consequence of the unprecedented world crisis, triggered by the “Crisis of 1929” in the United States.
Until then, the nation was funded mainly through the customs duties on imports and exports as stipulated in the 1853 constitution, of the then Argentine confederation which did not include Buenos Aires (subsequently included).
The collection of some co-participating taxes resolves the first major discussion between the nation and the provinces regarding customs duties.
Henceforth they would belong to neither one nor the other. The exclusivity would be from that moment and up to the present day of the National State.
The 30s were characterized by a sharp decline in foreign trade and with it a sharp drop in the collection of national customs duties. The immediate consequence of him was create two new taxesincome tax (current income tax) and consumption tax (current VAT) and internal taxes were unified.
Law 12.147 sharing of the proceeds is foreseen for the unified internal tax and taxes on consumption and income, between the nation and the provinces.
Some argue that the partnership was a strategy to advance the nation on the resources of the provinces. That that was what really happened.
What allowed this advancement of the nation was Article 4 of the Constitution, which established that the National Treasury would be financed, among other taxes, with “the other contributions which Congress imposes equitably and proportionately on the population”. The latter definition gave the national government the power to advance other taxes, a fact approved by the Supreme Court.
Law 12.147 provided for the distribution to the Provinces of a part of the proceeds, as per art some kind of “compensation”.
Sharing Discussions: Far Beyond the CABA Situation
The partnership it will always be the subject of discussion from 1935 onwards, due to the voracity of resources requested by the provincial and national states, with a municipality of Buenos Aires relegated to any type of discussion, which will be explained later. So it can be mentioned among other discussions and problems:
1) The delay in the transfer of funds from the nation to the provinces;
2) Some agreements between the nation and the provinces, such as the one of 1992 in which the reduction of 15% of the participating mass was agreed to finance ANSES, and a claim by Córdoba which led to a staggered return agreement for all the provinces .
3) The discussions for the allocation of new taxes. Participation is automatic, except for specific destinations agreed between the nation and the provinces. Generally, we will not find 100% co-participating fees. (Dollar tax, Various anti-money laundering, Solidarity contribution, have been the subject of a specific assignment).
4) Subsequent reforms modified the percentages of participation, which in short was conditioned by the rate of development and by the consistency of the population of each province. The apparent loss of data from the 2022 census adds another drawback to this issue.
As for the CABA issue, it has a different character: its subordination as a municipality to the national state from 1935 to 1994. A sort of “national municipality”.
But despite having the port, the customs fees have maintained their historic status as the exclusive source of funding for the national government.
While the Municipality of the City of Buenos Aires, as seat of the National Government, would obtain -as up to that moment and until today- its resources from the part of the partnership that corresponded to the nation.
The person in charge of the administration of the municipality of Buenos Aires was, in fact, the president of the nation, who delegated these functions to the mayor. It was only with the Constitutional Reform of 1994 that the Head of Government began to be directly elected.
The municipality of Buenos Aires then remained subordinated to the discretion of the use of the funds by the nation.
In 1988 it was established a clearer distribution model to the municipality of Buenos Aires, through article 8 of the law on co-participation 23.548, where it was expected that the national state would deliver to the municipality a participation “compatible” with historical levelswhich could not be lower in constant terms than the amount transferred in 1987.
For the first time the Municipality has guaranteed a minimum minimum fund.
In 1994, as a result of the constitutional reform, the autonomous municipality was established participate directly in the partnership – and do not depend on national funds, and a commitment has been made to change the partnership. This must have happened in 1996. It never happened.
But the 1994 reform established it the transfer of functions of the nation should be resourcedgeneral rule for any type of transfer, not only to the CABA, but above all important for the latter which, due to its new autonomy, would be the one that from that moment on would have to assume the greatest number of functions on the part of the nation.
The temporary solution to the lack of a new co-participation law was the Necessity and Urgency Decrees (DNU) from 2003 to 2020. To temporarily solve the problem of the new functions of the Autonomous City and the budget of the old Municipality, from After the 1994 reform , several decrees were issued belatedly.
The first is the decree 692/2002 which allowed the automatic and daily transfer of funds by the Banco Nación. Then, Decree 705/2003 established from 1 January 2003 the participation that corresponds to the CABA, with a coefficient equal to 1.40% of the funds that corresponded to the nation.
By this way, CABA already had day funds and a percentage of “pseudo-participation” On January 5, 2016, the “Agreement for the Progressive Transfer to the Autonomous City of Buenos Aires of the powers and functions of security in all non-federal matters exercised” was signed between the National State and the CABA “. the Autonomous City of Buenos Aires”.
It happened then the transfer of the obligation to provide for local security, but with “resources”, as dictated by the Constitution. Result: that sort of “participation” was increased to 3.75%; then, the Fiscal Patt 2017 lowers it to 3.50%.
In all cases, the decrees were implemented by the CABA laws, so that the a sort of “agreement” between the nation and the CABA“legalized” by national decree and local laws.
So far these decrees have sought a temporary solution to the lack of a law on co-participation. The current government simply changed the percentage that had been allocated to the CABA by decreasing it, in the same way it was increased before. By decree.
The government has deemed it within its competence that if one decree increases the resources allotable to the CABA, another may decrease them. So he defended him before the Court.
To try to close the discussion, an Act of Congress passed that decree in 2020 and even restore the shareholding percentage to 1.4%.
Even more, the nation has asked that the decrees of the previous government be considered invalid, for which it is asking for the restitution of funds exceeding 1.4% -plus their interest-.
All of this follows from the very arguments expressed in the file for which the CABA was granted the Supreme Court’s detention.
The Court, examining the entire history of the partnership, and the arguments of both parties, ruled in favor of CABAwhich, moreover, should at this point have a direct participation in the shared mass, like every province.
The Court understood that the decrees following the 1994 reform actually were bilateral agreementsTherefore, a change to what was previously agreed cannot be imposed unilaterally.
Furthermore, the resource transfer rule would not be satisfied if the stake were returned to 1.4%, when CABA continues to maintain the security service.
conclusions: The history of sharing suggests it it was a collection need of the nation more than a way to avoid multiple taxation. A need that accompanies us to this day.
However, in order to get out of the “trap” of sharing, we must first get out of the “trap” of public spending, which, moreover, was the one that generated the need for the old national tax on consumption and the need for this, in order to include it in a mechanism of “participation” to be able to implement it without objections from the Provinces.
A separate chapter is the case of the CABA, which is not even compared to the Provinces. The influence of the nation state on it is much more “personal” and “discretionary” despite the fact that, together with the provinces, they have committed themselves to a new partnership law that includes the CABA.
All this highlights the failure of this system, contentious and manipulable that has nothing to do with the federal republic that we have aspired to be for more than 200 years.
Source: Clarin
