Impuesto a los Bienes Personales - Oficina de Presupuesto del Congreso

Analysis of National Tax Revenue – April 2020

by Nicolas Perez | May 11, 2020 | Tax Revenue

As anticipated, inflation-adjusted tax revenue fell 23.7% year on year (YoY) in April. Beyond some tax measures adopted by the National Executive Power to assist the productive sector in coping with the economic impact of the Mandatory Preventive Social Isolation (ASPO), the fall is explained by the slowdown in economic activity.

Revenues from national taxes totaled AR$398.66 billion, which implied a growth of 11.6% YoY.

The most important taxes had a significant drop in real terms. Income tax collection fell by 30.9% YoY, VAT by 25.9% YoY and Social Security resources contracted by 24.7% YoY. In addition, foreign trade revenues fell 15.2% YoY.

Although the pandemic and the ASPO were the main factors behind the poor collection performance in April, other factors also contributed. From the regulatory point of view, VAT refunds for the purchase of food, the reduction of Employer Contributions for the health sector, the deferral of the SIPA component of Employer Contributions for two months and the freezing of part of the Fuel Taxes in effect during March contributed to the lower inflow of resources. From the macroeconomic point of view, the deterioration of the labor market and the contraction of international trade contributed to the sharp drop in revenues.

May revenues are expected to continue to fall in real terms. Although some economic activities were exempted from the quarantine during April, the impact of the measure on the level of activity remained. On the other hand, measures such as the reduction or deferral of Employer Contributions, the reduction in the rate of the Tax on Debits and Credits to Current Accounts and the VAT refund for dairy products will have an impact on May revenues.

Fiscal federalism in Argentina. Latest developments in historical perspective

by Juan Fourcaud | Mar 4, 2020 | Tax Policy and Fiscal Federalism

A review of the country’s fiscal federalism reveals the complexity of its parameters and the difficulties to establish a definitive consensus-based regime between the national government and the provinces, a constitutional mandate that has been pending for 23 years.

The federal tax co-participation regime was established by Law No.12,139 of 1935. The regulatory dispersion continued until the integration set forth in Law No.20,221 in force until 1984, recurrently infringed.

Among the decisions that infringed that law was the unilateral transfer of education and health functions to the provinces, without the respective financial allocations. This was the origin of the National Treasury contributions, an arbitrary mechanism to remedy problems as those caused by that discretionality. In 1980 pre-co-participations were introduced when it was decided that a portion of the VAT would be use for Social Security.

At the beginning of 1988, Law No.23,548 established a temporary distribution regime still in force. The secondary distribution scheme is not based on objective criteria and the original primary distribution, which reserved 54% to the provinces, was permanently altered.

The 1994 constitutional reform included co-participation in the National Constitution and provided for the enactment of a framework law before the end of 1996.

This mandate has not yet been accomplished and the most concrete legal approach was the series of fiscal pacts signed since 1992, whose interpretation and implementation led to legal disputes: federalism of concertation in our country lacks legal certainty.