Taxes: what is behind the controversy between Guzmán and AEA

One of the postcards left yesterday for the 20 years of the Association of Argentine Entrepreneurs (AEA) was the crossing with the Minister Martín Guzmán for the increase in the tax burden in Argentinaat a time when the government is promoting the creation of the unexpected income tax.

“The tax burden has grown a lot in recent years, Today we are almost like the countries of the OECD (the organization that brings together developed nations). New taxes appear all the time. The unexpected income tax is a setback, “EEA chief Jaime Campos said yesterday at the event in the midst of a dialogue with the minister.

The official arrived at the Sheraton knowing he would find the new tax questionable and willing to defend the measure, which aims to establish an additional 15% rate on income tax for companies that have earned more than $ 1,000 million and have an increase in this fee exceeds 10% in one year.

Before the mention of Campos, Guzmán assured that in Argentina “the average tax burden is below the OECD average. The problem is that there is a high degree of informality in the economy, so the average is not that representative and the tax burden is heterogeneous “.

According to the Mediterranean Foundation in Argentina, tax burden including provincial and municipal national taxes reached 31.5% of GDP in 2021.

“Unexpected rent is not a new tax. This is a one-year rate in the context of war in Ukraine which generated a major distribution problem all over the world, “Guzmán slipped and pointed out that other countries such as Great Britain and Italy applied a similar tax to specific sectors.

To support the idea that the tax burden is not that high, the minister referred to a recent work by the IAraf which specifies that there are 165 taxes in the country, adding national, provincial and municipal taxes, rates and contributions. “Is there anyone paying 165 taxes in Argentina? Nobody pays 165 taxesGuzmán wondered and answered.

The IARAF fiscal vademecum was carried out in 2019, 2020 and 2022 and in all three cases it gave a similar number. Review the different taxes that exist in the country, including specific rates that are only charged in certain businesses. While it is clear that no one pays all 165 taxes, indirectly the cost of these taxes affects consumers,

“In taxation it is essential to distinguish between the concept of legal impact and economic impact. The legal one refers to the person who pays the tax (who brings the check) and the economic one to the one who ends up paying it, from the price of what you buy is more expensive“said Nadin Argañaraz, director of the IAAF.

As an example, Argañaraz pointed out that the municipal inspection, safety and hygiene tax (TISH) “is a percentage that taxes the invoicing of companies and therefore affects prices and ends up being paid in part by consumers. According to analyzes carried out for certain merci, the TISH ends up explaining about 2% of the final price“.

In his presentation at the Sheraton, the minister explained this nationwide there are 28 taxes. And he said that of these 12 collect 94.5% of the total.

AFIP data show that so far this year VAT is the tax it collects the most with 29% of the total, followed by profit with 24% and social security contributions with 23%. In a second phase, the lien on credits and debts (check tax) and withholding taxes on exports appear, both with 6%, followed by import duties, with 3%. Below are the taxes on fuel and personal property, both with 1%.

“The actual collection in our country is concentrated in relatively few instrumentsArgañaraz agreed.

IAAF data shows that with the 2021 numbers, 91% of Argentina’s consolidated collection is concentrated in 12 taxes. Of these, ten are national and the remaining two are the provincial gross income and the municipal safety and sanitation rate. In reverse, another 153 different taxes collect the remaining 9% at consolidated level.

AQ