How is the COLLECTION of the Argentine STATE

The Argentine state, like the rest of the countries, you need raise money to be able to pour these funds into different areas that allow the operation of a nation. How is this process and where are those pesos destined.

It should be borne in mind that, as in any organization, a country receives income on behalf of its citizens through taxes direct and indirect, among other collection instruments, but also the State makes expenses varied in different population and structural needs for its operation as such. The balance of these two variables in recent decades has been negative for Argentina, resulting in a fiscal deficit that must be covered by repeated issuance of debt under different formats and also by monetary printing.

Ample samples of the secondary effects that this generates are the arduous renegotiations with the creditors and owners of public titles they cannot be canceled by the Government. The same with the issue of pesos, which generates a greater circulation of banknotes and an increase in inflation.

To get an idea of ​​the current situation, according to data from the Ministry of Economy in the first quarter of 2020, income of the public sector The national GDP amounted to 15.9%, while the primary public spending (spending before debt interest payment) increased to 18.2% of GDP.

This balance between both variables means that the fiscal deficit is -2.3% of GDP. “In other words, the Argentine state only collects 86% of what he spends, without considering the payment of interests“indicates a report from the Institute for Argentine Social Development (IDESA).

To add this survey that these data show “a great imbalance” between income and expenses.

A reflection that is not an isolated event, but “a secular tendency of the State Argentinian to spend always above their resources“And in this context of quarantine freezing of the economy, as a way to prevent the spread of the coronavirus, the fiscal deficit it gets bigger.

“In Argentina it implies aggravating a fiscal deficit chronic that comes from decades “, sentence IDESA.

Argentine state: inflation and collection

The fiscal deficit has increased in Argentina not only due to the current paralysis of the economy due to the coronavirus, but this national problem has been around for a long time and is linked to its own economic emergency, with high levels of inflation and one recession who had been punishing our country very hard a long time ago. A situation that experts call “stagflation”

“The solutions to this problem were not even close to being resolved in the first months of the new government’s administration when the pandemic erupted in national territory. Faced with this situation, the national state adopted the mandatory quarantine policy for all of society, except for particular items covered by current regulations, “summarizes iProfessional the economist and professor of the UBA Agop Karagoz, director of Kartal Consulting and former government adviser on tax collection.

This specialist indicates that “numbers don’t lie”. Is that from the last report of tax collection April 2020, it is found that the negative impact on the various sectors of the economy was reflected in a substantial decrease in income.

“In any case, we must not lose focus, the pandemic only accelerated the tax fall that we had been having in the previous months “, he concludes Karagoz.

In real terms, it graphs that throughout 2020 the increase in collection YoY was below the rate of inflation, weakening the national financial structure.

According to the report of the AFIP, the tax collection YoY increased in nominal terms by 11.6%, from $ 357.3 billion to $ 398.6 billion.

“However, if we weigh this increase against 48% of year-on-year inflation we find a drop in the collection of the Argentine state in real terms around 24% “, clarifies Karagoz.

The collection of the Argentine State through taxes suffered a fall due to the economic crisis and the coronavirus

How much does the Argentine State collect?

The two taxes most relevant that the Argentine tax structure has, the Value Added Tax (VAT) and Profitsthey had very steep falls in real terms in one year.

“The VAT fell around 27% while, for its part, the tax on Profits It had a drop that was around 31.8%. This largely reflects the decline in economic activity“details the economist consulted by iProfessional.

According to Karagoz, there are some striking data in these main tax resources what does he have Argentine state:

Value Added Tax

The Value Added Tax (VAT) is a tax burden on consumption, which the Argentine state charges indirectly through the Commerce or entity saleswoman of goods or services at the time of doing all transaction commercial.

With revenues of $ 126,884 million last April, VAT collection registered a meager increase of 8.3% nominal. However, the “most alarming” figure is found when analyzing the DGI VAT. That is, in the VAT of the component tax.

“This is a key indicator when analyzing the dynamism of economic activity and the consumption, which fell even 2.3% nominal. On the other hand, the VAT DGA, more commonly called ´Customs VAT´, rose 32.5%, “he stresses.

Profits

The Income tax is a tribute paid by both companies and Physical persons to the Argentine state based on your annual income, since it is calculated in proportion to your benefits.

So, Profits It is another striking indicator, since the year-on-year variation in collection It was 1% nominal, going from $ 72,783 million in April 2019 to $ 73,483 million in the same month this year.

“The drop in collection in real terms is shocking”, sentence Karagoz.

Country Tax

The tax “For an Inclusive and Solidarity Argentina” (PAIS), in force since the beginning of this year and which is taxed with 30% on all operations carried out abroad (acquisition of travels and you buy with cards), adds to the acquisition limit of foreign exchange up to $ 200 for those who want to save or 8% on digital services based abroad.

The income In this way, they reached $ 4,564 million in April, representing 1.1% of the total collected.

In general terms, it is observed that the tax revenue of the State Argentinian for last April they reached the sum of $ 398,659 million, accumulating for the first four months of 2020 $ 1,841 billion, which implies a nominal interannual increase of 33.4%.

Now, well, if we deflate that number by the corresponding inflation of the period, we find that the collection had a contraction in real terms around 11% “, summarizes Karagoz.

That is why other sources of collection are sought, such as wealth tax.

Expenditures of the Argentine State in a pandemic

Far from concluding the problem, the situation worsens even more when the other side of the coin is analyzed: the expenses what does the government.

It should be remembered that today there is no official budget For the year 2020 for political issues related to the change of management in December and the quarantine of the coronavirusThat is why it is being used to manage the extension of the 2019 budget, a situation that will continue until the Legislative power can meet and the Executive power present the bill.

“This makes it difficult to obtain a precise overview of the road map that the Government had planned for the current year. Additionally, within the framework of the health emergency associated with the impact of the pandemic on national territory, the need Argentine state has to face the expenses associated with the economic and health crisis in our country, it was not long in coming, “he underlines. Karagoz.

So the government of Alberto Fernández It promoted a package of economic measures to face the crisis generated by the pandemic. These measurements range from tax exemptions even some destined to sustain the income of the most vulnerable population, such as the reinforcement of retirements minimal, AUH, provision by unemployment, IFE, among other.

He also took steps to assist SMEs and Business from the private sector like Bank credits, REPROlow Employer contributions, ban on layoffs, loans to rate 0% for monotributistas and freelancers, to name a few.

It is estimated that the State Argentinian with the special measures “it will provide an economic assistance package between the months of April and June that is around 5.6% of GDP, and to date, a large part of them have not had an impact on budget execution “, analyzes Karagoz.

And he adds that, anyway, “seeing the current photo of the execution of the expenditure by purpose and function, we can identify what are the priorities for National government observing how it distributes the public treasury “.

Public spending is basic in the Argentine State when analyzing the deficit

Public expenditure: the 5 central categories

Within the 5 categories that make up the purpose of expenditure of the Argentine state, We will mention the most relevant subcategories of the same where the money collected is dumped, based on the provisions of the last budget.

First, it is observed that spending within the category of “Social services“amounts to $ 1,269,211 million. The most representative expenses within this purpose are made up of expenses in “Social Security“($ 999,885 million),”Education and culture” ($ 85,413 million), “Health“($ 81,848 million) and”Promotion and Social Assistance“, with $ 63,480 million.

Secondly, there are the “Economic Services“, with a total expense of $ 181,323 million, where they stand out”Energy, Fuels and Mining“($ 72,142 million), Transport ($ 61,293 million) e Industry ($ 33,602 million).

The podium is completed by the services of the “Public debt”, with an expense of 176,181 million pesos.

In fourth place is “Government administration“, which monopolizes $ 128,775 million, where”Internal Relations“takes $ 76,302 million and”Judicial“other $ 31,407 million.

Finally, in the fifth place it stands out “Defense and Security Services“, which took 70,766 million pesos last year.

Expenditure and income in deficit

As a great conclusion, you can see the Fiscal Balance Index of the Center for the Study of the New Economy (CENE) of the Belgrano University, which registered a decrease of 19.8% in March with respect to the level it had registered in February and a decrease of 20% in relation to the same month last year.

“The deterioration produced in March is attributable to the effects of the pandemic, which manifested itself in a simultaneous fall in tax revenue and an increase in public spending. Indeed, March was the first month under the effect of the coronavirus, ” Victor Beker, director of the I ATE DINNER. This can be seen in the variation of expenses and income from early 2019 to date:

The evolution of the expenses and income of the Argentine State since the beginning of last year to date

“In particular, transfers to provinces Yet the Buenos aires city, as well as those destined to the universities, together with the items destined to the payment of family’s asignations and the economic subsidies“he added Beker in a report.

In turn, this is evident in the Fiscal Balance Index, which is calculated as the quotient between expenses and the income totals. That is, the value 100 indicates a balanced situation, but above said value it is denoted surplus, and below reflects that there is deficit. The latter is what predominates in recent years in the Argentine state.

The CENE Fiscal Balance Index (IEF) indicates that for a long time the expenses of the Argentine State have been greater than its income

“It is evident that in the face of the uncertainty generated by the virus and its spread, and the consequent fall in consumption and investment of almost all the activities of the economy, there is an urgent need for the Argentine state intervene and carry out an economic rescue that integrates practically all sectors of society, “he requests Karagoz.

It is that, complete, in a country with 40% of the population submerged in the poverty and 50% of the economy under informality, “the situation becomes dramatic”.

For this reason, this expert remarks that the contractive cycle of economic activity is fervently reflected in the results of the tax collection as previously reflected.

“The obvious conclusion is not long in coming, with the coffers of the State Argentinian who are becoming enmagrendo, with the decrease of the economic activity and an exponential increase in public spending intended to alleviate the crisis, we will observe that not in a long time, the primary fiscal deficit will also deepen exponentially “, sentence Karagoz.

Therefore, the expectations about the sharpening of the crisis and the continuous fall of the exercise economic, “will possibly reflect the deepening of the fall in tax collection (mainly in real terms) “. In this aspect, the economist maintains that the Government must interfere in the economy to “against the clock and with surgical precision, since winter is not only coming for health, but it is already here for the economy”.

In this sense, Vicente Lourenzo, member of the SME commission of the Professional Council of Economic Sciences (CPCECABA)he says to iProfessional that “the destination of the proceeds must be reassigned to items that basically attend to what generates added value quickly, such as small workshops, promoting trades, incentives to the generation of software, apps, and digital platforms, product processing of our regional economies, among others”.

Thus, Lourenzo maintains that the economy proactively.

He also believes that continuing to encourage consumption through direct allocation of funds to individuals, “should be an exceptional and time-limited measure to respond to the emergency, but a development policy Pyme is what endures and definitively reactivates “our weak domestic market” .-

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