comes a new relief for dependent employees which today are joined by income tax and, even if some celebrate, there are reasons to also affirm that it will end up deepening the problems that the taxman has today.
This is because, from time to time, the changes that are introduced end up being patches that only try to fix specific situations from some sectors.
Is that, instead of discussing what tax we want, the changes seem to respond more to the need -which is present from time to time- to dampen the demands of pressure groups of the moment.
Thus we arrive at the present, in which it is no longer so linear to know which employee in a dependency relationship is affected by the tax and where the mHow much each would have to pay is not known which takes time to discover.
Although there are many aspects to analyze, the reality is that there are at least some three problems which affect the status of employees and which should be reviewed in the future.
Excess of special cases
The first problem that Profits has, always when it comes to workers, is the number of “special cases” that must be considered when we sit down to analyze everyone’s situation.
In other times (not so long ago) it was enough to know what deductions each employee reported (for example if he had children, spouse, dependents, had he made any donations, etc.).
In technical terms, this mode was looking for employees they will be taxed according to their ability to pay. Today it is totally different, since the elements to consider do not respond to that same logic.
Now, before starting the job, you need to check the gross salary to see if it exceeds the created floor with no other criterion than that of reducing the number of subjects affected by the tax.
In the event that it passes it, it is necessary to see that it is within the strip it has a increased special deduction which allows you to subtract a greater value than those that are definitely outside these parameters.
Then you must analyze whether any of the components of the remuneration have not been exempted (such as overtime, daily allowances, cash bankruptcies or productivity bonus, to name a few examples).
If, after all, the income exceeds this amount, only then are the deductions that have been seen in the past considered and the value of the withholding tax calculated.
The point is that, by establishing this type of mechanism, many situations are generated in which, even if they receive the same pocket money, two employees do not pay the same (which is precisely the angular basis of the concept of taxable capacity).
No automatic update
Another drawback that exists today is that not all deductions update automaticallysomething that, in times like the present ones, is of vital importance.
Some examples can give the guideline of the topic. Non-taxable capital gains, spouse and children values are updated by RIPTE annually. The same happens with the others. such as rent or domestic staff, whose ceilings are set automatically.
The special deduction on gross salary, on the other hand, is not linked to any index. Indeed, Responds to a decision of the Executive PowerTherefore, the amount and when it is applied are not fixed.
At the other extreme, the home loan interest deduction is capped at $20,000 a year, which It has not been changed for more than 20 years.
The lack of unification in the criteria for adjusting these variables means that the situation of each employee depend more and more on chance (rather than, as mentioned, their taxable capacity).
And then who pays?
Finally, the current model has a practical problem: it is not easy to identify who has to pay and much more complex is determining how much you have to pay for the tax.
And the complications of liquidating earnings grow with each new deduction or partial exemption. Always appreciated by workers, the truth is that increase the likelihood of making mistakes in which they liquidate.
Closely associated with this is control. Less general are the exempted concepts, each affidavit becomes special and it takes longer to detect whether there have been any omissions or errors. Yes, AFIP also costs more.
Also, including so many patches ends up generating uncertainty about the tax. And, with that, you lose the predictability of knowing how much each employee will earn after paying the tax. With all that planning means.
Earnings were an exclusive privilege for senior corporate officials which ended up losing its escalation and becoming popular for not updating its parameters based on feasible indicators.
If the next government wants to give back to the tax authorities something it has had in the past, it should start by solving, at least, the three problems described. Otherwise, it will be nothing more than a new patch. And we all know the consequences.
By María Paula Veliz, Tax Manager of the consulting firm Expansión Argentina.
Source: Clarin
