2023 ended with a decline in collections in real terms of 8.2%. Specifically, the Government managed to pocket 42,981,821 million dollars, recording a real decrease of approximately 8.2%.
In the year that ended, government income grew below inflation and almost no taxes were spared from the debacle.
The exception was the PAIS tax, which Alberto Fernández created at the beginning of his presidency to make access to the dollar more expensive. Over the course of four years, this tax increased in weight and was extended to other operations.
This led to the fact that at the end of 2023, The PAIS tax will see an increase of 861.4%, which implies a real increase of 202.9%. The consultancy firm ACM points out that “this is the product of the broadening of the tax base following the government’s new tax provisions at the end of July of the same year”.
“This tax has begun to take on more and more importance for the exchequer in terms of collection. In 2022, the PAIS tax represented 0.4% of GDP while in 2023 this percentage would have risen to 0.8%. double your collection in a year“, specifies ACM.
The rest of the taxes performed poorly. December, with a real drop of 19.1% of the total collection was the fourth consecutive negative result. Throughout the year, the drought has taken a toll, reducing revenue through withholdings, along with tax benefits that former minister Sergio Massa doled out to support his failed presidential bid amid accelerating inflation.
In reverse, 79% of the total collected by PAIS in 2023 was recorded between the months of August and December. The main reason is that the tax base of this tax was increased in July, when it also started to apply to all imports. This was strengthened together with the exchange rate correction in August and December.
Over the last year, tax collections have seen real declines in 11 of the last 12 months. In 2023 the collection represented approx 22.8% of GDP, while in 2022 it was 24%, in line with the level of the last five years, according to ACM.
“This dynamic is difficult to reverse at least in the short term, where an increase in inflation and a cooling of economic activity is expected next year. Likewise, the recovery of withholdings due to better weather conditions will lead to an improvement in terms of real Treasury revenues,” they indicated.
During 2022 the PAIS tax represented the 0.4% of GDP while by 2023 this percentage would have risen to 0.8%doubling his collection in a year.
“Looking to 2024, We hope that the PAIS tax will continue to grow much faster than the others due to extension to total imports and exchange rate correction,” consultancy firm LCG says.
“Revenue from export duties would rebound as the drought ends. However, in a year of stagnant activity and high inflation levels as we expect, DGI VAT will continue to show some decline. Furthermore, it remains to be determined whether the possibility of earnings reversal materializes in the fourth category, which is not included in our projection. If realized, it could add 0.8% to GDP in 2024,” LCG points out,
In this way, according to LCG’s estimate, tax collection will just exceed 202 billion dollars in 2024implying a 25% drop in real annual average, this would lead it to reach 20% of GDP.
Source: Clarin
