The banks once again insist that the tax burden on the financial intermediation activity is a barrier to credit expansion in Argentina. The other, of course, is inflation and the contempt Argentines have for the peso as a unit of savings.
This was stated in a recent technical report drawn up by Adeba, the association that brings together private banks with national capital.
To exemplify what taxes mean put the case of a personal loan or mortgage.
Based on a report by the Mediterranean Foundation, Adeba backs it up taxes represent, on average, 44% of what is paid when taking out a loan (although it can reach 50%)while the tax-free interest rate accounts for the remaining 56% or 50%.
In other words, when you take out a mortgage, each installment has a tax component that approximates thehalf of the amount paid by the customer goes to the collection agencies of the nation, province or municipality.
“Companies and individuals who use the financial system are subject to a tax burden – national, provincial and municipal – which unrivaled in the regionAdeba says. And he points out that most taxes are “bad taxes” they generate distortions and “waterfall effect” on economic activity.
Among the taxes that weigh on financial users, the following stand out: taxes on bank credits and debits, the so-called tax check; taxes on Gross Income for credit transactions; income tax for service provided; income taxes liquidity tools of the BCRA; tax of seals on cards and other financial transactions; municipal tariffs for branches and municipal tariffs for ATM and self-service terminals.
In addition to taxes, there are withholdings and collections VAT, Earnings and Gross Income on payment transactions which, in practice, constitute a higher tax burden and discourage the use of financial services.
In truth, and despite the announced efforts to bring people closer to the financial system, through the so-called “financial inclusion” what you are getting is something else. clarion reported this Saturday that in four years 3.7 million credit cards have been cancelleda reduction of 18% of the total number of “plastics” actually active in 2018.
So Adeba insists it “Argentina is the country in the region with the lowest level of banking access, measured as the volume of bank loans and deposits to the private sector in relation to its gross domestic product (GDP). In our country, bank loans to the private sector represent 8% of GDPwhile the regional average about 50%.
A low degree of access to banks means less credit for businesses and individuals, which in turn limits society’s ability to invest and consume, which leads to lower economic growth and employment.
“The low level of access to banks in the last 20 years is largely explained by the high tax burden on users of banking services. The tax burden, together with the loss of value of the currency, are mainly responsible for the low level of our country ”, adds the report.
Another aspect that emerges from the study of the Fundación Mediterránea is that the tax burden has grown steadily over the past 10 years. Thus, for example, the average gross income tax rate in the banking sector doubled between 2008 (3.8%) and 2022 (8%). In addition to the rate increase, in recent years the relative weight of the IIBB has increased due to inflation, as this tax weighs (in almost all provinces) on the nominal rate of active operations, instead of taxing the spread (difference between active and passive rate).
The application of the gross income tax is being extended at a rapid pace. IN 2021, to compensate for the removal of a part of the shareholding held by the Province of Buenos Aires, the Autonomous City of Buenos Aires extended the taxes on the IIBB to the interest accrued by the monetary regulatory instruments (Leliq) that banks, thus increasing the weight of this tax on the financial activity.
The province of meanness It would also increase the tax burden in 2023 through an increase in the IIBB: it will apply a 7% rate to the interest that banks located in that province obtain from profits through investments in Leliq.
Source: Clarin
