The struggle between the national government and the province of Buenos Aires intensified over the years imposed promoted by Axel Kicillof, which will have a major impact on urban and rural real estate taxes and car owners.
The one who took the spear to strike Kicillof again was now the Minister of the Interior, Guillermo Francos, who defined the dictator of Buenos Aires as a new “circular 125”the remembered idea of the former Minister of Economy Martin Lousteau which put the campaigns on a war footing in March 2008.
Francos spoke on Wednesday, accentuating the line of the Casa Rosada: days ago the official deputy José Luis Expert had called to “tax rebellion” in the province of Buenos Aires, an initiative later supported by the president Javier Milei. Francos does not seem to have any intention of lowering the tone of the controversy. “Producers are on fire. Kicillof’s property tax is some kind of 125 Do you remember when the rural conflict began in 2008? WELL, will put all agricultural entrepreneurs in the province of Buenos Aires on a war footing“Franco said.
“The president criticizes Kicillof because it is the only way he can pay spending party in the province is by increasing taxes grossly,” said the head of the Ministry of the Interior.
The fight, of course, is about money. Much money. It could be said that the first “round” of this struggle originates in the decision of the national government intervene on so-called discretionary transfers, funds distributed by Treasury outside of what provinces receive automatically and without interference through federal tax sharing.
In 2023, the province of Buenos Aires received some 825,000 million pesos: is left with about 41% of the total transfers distributed by the Treasury to all provinces in 2023. If that spigot remains open this year, and taking into account expected annual inflation through 2024, the PBA should receive almost 3 billion pesos. It will not happen.
To overturn the Milei government’s decision, Kicillof turned to the Supreme Court of Justice, which is already examining the case, focused for now on the removal of the provision Fiscal Strengthening Fund. In February the loss to the Buenos Aires coffers for this item amounted to approximately 40 billion pesos. But Kicillof also demands another 14.5 billion from the National Teachers’ Incentive Fund (Fonid), plus another 4 billion pesos from support for the pension fund. In total, the governor of Buenos Aires reports that Milei’s management has withheld 60 billion pesos from him in the last month alone.
The Economist Nadin Arganaraz, of the Argentine Institute of Fiscal Analysis (IARAF) calculated that it will be difficult for Kicillof to compensate with tax what he would no longer receive from discretionary transfers.
According to their calculations, real estate and automobile tax collections have been decreasing in real terms since 2019. In the year in which it was carried out, the amount paid into the provincial coffers by these two taxes it fell by 31% in real terms between 2019 and 2023. To recover that loss, Argañaraz calculates, the collection of these two taxes expected to grow 529% in 2024. Argañaraz’s accounts are these: in 2023, ARBA Real Estate raised 156 billion and Automotive 133,000 million. They amount to only 35% of what the province received from transfers. Given the approved increases and the lower economic activity expected until at least mid-year, it seems impossible to achieve this goal. In other words, it is impossible for the funds that will enter the Buenos Aires treasury this year through these taxes to reach Kicillof to avoid an adjustment in public spending. In any case, the correction is up to the taxpayers.
Kicillof obtained the Legislature’s agreement to implement a 200% across-the-board increase. According to the law passed in sessions at the end of last year, the 200% cap also included the tax on automobiles (patents), although the authorities had the power to “inflation-adjust” the bills that arrive to owners every three months.
With the distribution of the first ballots of the period, taxpayers found surprises. In the case of urban properties the increases were up to 275%. This is how ARBA explained the difference: until last year the collection agency established a bonus for punctual payments and for those who had subscribed to the “ballot by post” service. This reduction reached 20% of the basic value of the tax. Now that advantage is no longer there. Tax for tax, the increase is a maximum of 200%. But without that voice, it increases 75% more, they said in ARBA.
Regarding the call for tax rebellion launched by Espert and supported by Milei, the head of the ARBA, Cristina Girard, assured: “We are not witnessing a collapse in compliance or collectability. This means that there is no ongoing civil insurrection or tax rebellion as Espert and Milei would have us believe,” the tax collection agency official said.
Along the same lines he added: “On the contrary, there is an attempt by the political superstructure to generate a climate of unrest to distract people from what really matters: the country’s problems, the adjustment, the recession, the brutal fall in popular income. To the point that we are entering, according to the president himself, the worst months. For this reason we need to distract ourselves from the reality, that the price level of the economy is impossible for existing salaries.” .
Source: Clarin
