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On Friday, the Argentine Senate enacted an extraordinary tax “on the 12,000 people” with the greatest fortune to solve the fight against covid-19, grant poverty subsidies and loans to SMEs, among other emergency social aid.
The project was approved with 42 votes in favor and 26 against after a long debate that polarized the political forces in a session broadcast live on YouTube.
The pro-government alliance asserted its majority to approve the so-called “solidarity contribution” that for the only time will try to raise the equivalent of about $ 3 billion.
“No one will have to sell machines or fields. The tribute falls on the financing of wealth ”, argued the director of the tax entity, Mercedes Marcó del Pont.
The chief collector of the government of President Alberto Fernández said that the gabela will reach “almost 12,000 taxpayers, who show liquid availabilities that are 25 times higher than the tax they must pay “.
The standard reaps a forceful rejection of the first opposing force, the neoliberal Juntos por el Cambio, by former President Mauricio Macri, who said that it is a “confiscatory” measure.
Coincidentally, the influential Argentine Business Association (AEA) said that “it affects private property, hits investment, production, employment and produces great discouragement.
The discussion about the popularly called “millionaire tax” occurs in a country with the 40.9% of its 44 million inhabitants in poverty and whose economy has been in recession since 2018.
Unemployment is greater than 10% and the fall in the Gross Domestic Product (GDP) estimated for 2020 is greater than 11%According to the Central Bank, with a fiscal deficit of around eight points, exorbitant due to expenses in the face of the pandemic, which leaves more than 39,000 deaths and almost 1.5 million infected trans-Andeans.
Social inequality
“There is fiscal space to tax those who have the most for the first time in history with a direct tax. This happens not only in Argentina. The regional tax system is tremendously unequal and inequitable, “Adrián Falco, secretary of the Latin America and Caribbean Tax Justice Network, told AFP.
“The system is based on consumption taxes and never on those with the most. Those who really pay taxes are very few and to evade tax havens and shell companies are used ”, he pointed out.
The initiative approved by the Chamber of Deputies, by 133 to 115 votes, with two abstentions from the left, burdens those who have declared equity greater than 200 million pesos (2.3 million dollars) with a progressive rate of up to 3.5% on goods in Argentina and up to 5.25% on goods outside the country.
“Ignite spirits”
“This tax is total madness. It is posed to those who already have 32 thousand problems and this will inflame spirits “, questioned the economist Juan Carlos de Pablo, professor at the University of the Center for Macroeconomic Studies (Ucema),
20% of the proceeds will be used for medical supplies for the pandemic, another 20% to SMEs, 15% to social developments, 20% to student scholarships and 25% to natural gas ventures.
“The tribute reaches 0.8% of total taxpayers. 42% have dollarized assets, of which 92% are located abroad. It is far from taxing productive activity ”, explained one of the authors of the project, the official legislator Carlos Heller.
On the opposite side, the president of the powerful Argentine Rural Society (SRA), Daniel Pelegrina, warned that it “wants to be presented as a contribution of the richest, but we know what happens with all those unique taxes, they stay forever “.
But Hernán Letcher, director of the Center for Economic Policy Studies (Cepa), explained that “the proposal is not exclusive to Argentina and there are at least 11 countries in Europe and Latin America that advance in greater tax justice “.
“These income support measures for families and subsidies are to mitigate inequality,” Letcher told AFP.
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