The sheet is not enough for taxpayers and the public sector

When the sheet is short, you already know that it is impossible to cover everything. And in this pandemic situation, the resource sheet in Argentina is too short to cover the growing needs.

What to cover first is a dilemma facing authorities today. Containing or mitigating the spread of the coronavirus and trying to prevent the effects of the recession from spreading more than the disease will require an injection of money by the public sector.

In Europe and the United States, fiscal and monetary measures have already been announced to mitigate the effects on the economy. The director of the International Monetary Fund (IMF), Kristalina Georgieva, said that at the fiscal level the priority is spending on health, but that measures will also be needed to soften or shorten the economic impact.

In line with these global recommendations, on the side of the taxpayers, business chambers, taxpayers and other entities, they are asking for relief in taxes, labor charges and payment systems from the three levels of government.

In this context, Argentina is faced with the dilemma of having more resources for these active policies without further strangling a private sector that is already very complicated.

Despite record tax pressure, the collection for February showed a real year-on-year drop: it rose 42.3% nominal (with an increase of only 30.3% of the tax VAT, indicator of consumption) compared to an increase of 50.3% of retail inflation.

Immediate agenda

On the other side of the counter, taxpayers with resentful economic activity will have more complications to comply with. This week is the monthly VAT due dates and the Monotributo expires on Friday.

According to Idesa, 23% of Argentine households have an own account manager. Freelancers (along with those in the informal sector) are a group that will be especially affected by unemployment and there are countries that are already considering measures to help them.

On the other hand, a key date is approaching to enter the moratorium to regularize debts for up to 10 years that the Nation has implemented for micro, small and medium-sized enterprises (MSMEs).

Those who join until the 31st of this month will have the greatest benefits. Except for the smallest, the rest will have to pay an account, which will increase if it is made in April. Will there be any relaxation in this regard? Taxpayers are already asking for it.

Another demand is that this moratorium be extended to larger companies. The Federal Administration of Public Revenue (Afip) had said that it was studying a plan for this sector, but there is still nothing concrete.

It is clear that in a semi-paralyzed world, economic difficulties (and aid needs) will not discriminate by size, but rather by sector.

Lastly, an issue that is becoming an increasing headache: withholding, collection and collection regimes that imply payments on account with high financial costs for companies and individuals.

With such limited room for maneuver, the effectiveness of the use of resources is essential. Tax relief and increased spending should be redirected to where it is most needed. It seems like an obvious statement, but putting it into practice is not so simple.

Print edition

The original text of this article was published on 03/17/2020 in our printed edition.