Lacunza, López Murphy and Frigerio pointed out against the “Fiscal Consensus” that will be signed this Monday
Economists from Together for Change demonstrated today against the Fiscal Consensus that the president and provincial governors will sign tomorrow. The only district in the country that will not join is the Autonomous City of Buenos Aires (CABA), whose head of Government, Horacio Rodríguez Larreta, rejected the initiative because it favors the increase in taxes and would also force him to desist from demands of the City to the Nation before Justice, for the withdrawal of funds from last year.
“Poverty 40%, inflation 50% and gap 100%. This long weekend, three solution proposals advanced: indefinite re-election of mayors, increase provincial taxes and raise the plane fare floor. If some percentage increases, luckily the next weekend is also long ”, tweeted with irony the former Minister of Economy Hernán Lacunza, who already on Thursday, when the president managed to commit the radical governors Gerardo Morales (Jujuy), Rodolfo Suárez in the Consensus (Mendoza) and Gustavo Valdés (Corrientes), had harshly criticized the Pact that will be signed tomorrow.
The radical governors assured within Juntos por el Cambio, however, that they will not increase Gross Income (the main provincial tribute; it explains between 70 and 85% of the income of the provincial jurisdictions) nor that of Stamps, and that they will sign because they need to refinance their debts with the Nation.
“Fiscal Consensus 2021: spending does not stop”, had synthesized Lacunza, who was Buenos Aires Minister of Economy in the management of María Eugenia Vidal and then Minister of Economy of the Nation, after the resignation of Nicolás Dujovne after the defeat of Mauricio Macri in the PASO 2019.
Lacunza’s ironic tweet about the news of recent days
According to Lacunza, the Consensus to be signed tomorrow will have four effects :. In the first place, it will increase the margin of the provincial administrations to increase the tax pressure that – he said. “Since 2019 it has already increased 1.5% of GDP.” And it will do so, he specified, by increasing the rates of gross income, stamps and property tax and through the provincial sanction of inheritance taxes.
Another consequence, said Lacunza, is that the incidence of spending in relation to GDP will not decrease even if the economy grows, since now provincial spending will be able to grow at the same level as nominal GDP, that is, the real growth of the economy. plus the inflation rate. The third effect, said the former official, is that the Consensus will make permanent tax increases that were temporary. And finally, it will make the fiscal responsibility law take effect only in 2023 and, moreover, from higher levels of spending.
Another former Minister of Economy (and also of Defense), the new national deputy Ricardo López Murphy, tweeted against the fiscal initiative that will be signed by the Nation and Provinces. “Kirchnerism was not enough to upload personal property. Now they want to make a fiscal pact that allows increasing gross income and creating new taxes on inheritances, donations, and bequests. The voracity for taxpayers’ money is infinite, ”he wrote.
López Murphy’s tweet against “fiscal voracity”
Another economist and former minister, but of the Interior, recently elected deputy, Rogelio Frigerio, also criticized the new Fiscal Consensus.
“It implies a more flexible spending,” he said. “Before, the limit was set by the Consumer Price Index; now, by taking the nominal GDP -which includes the inflationary effect- it gives room to spend more, as long as the economy grows ”. In this way, he added, “there will be a greater margin to increase public spending.”
According to Frigerio, the provinces are harmed “by a model in which the emission happens to replace the tax collection; the issue is not shared and this model ends up discriminating against the provinces “
According to Frigerio, who as minister negotiated the “2017 Fiscal Consensus”, that time he considered “gradually reducing spending that had almost doubled in the last decade.” Now, he said, it’s the other way around. “This ends in an increase in taxes, when what people expect from politics is tax relief.”
The national deputy for Entre Río also said that the provinces are harmed “by a model in which the issuance happens to replace the tax collection; the issuance is not shared and this model ends up discriminating against the provinces ”.
President Alberto Fernández and the Minister of the Interior, De Pedro, with the radical governors, who will adhere to the Fiscal Consensus
“When it was our turn, I spent months negotiating with the governors and now they are trying to do it from one week to the next. They would have to review this, because it is not what people are expecting, “he completed.
The document that the president and governors will sign tomorrow at 5:00 p.m. in addition to encouraging the provinces to tax increases in wealth for inheritances, bequests, donations and inheritance advances, stipulates maximum rates for the Gross Income tax that open the door to increases in various items, such as communications and financial services
A draft of the document says that “it is necessary to consolidate the implementation of instruments that seek to redistribute the tax burden in such a way that property taxes have a greater impact and possible reductions in revenue from taxation on productive activities can be offset. consumption ”. Another passage adds that the provinces “will endeavor to legislate a tax on any increase in wealth obtained gratuitously as a consequence of a transmission or act of that nature,” in addition to establishing increasing rates based on the value of the amount transmitted.
The evolution of the own collection of the provinces, in percentage of the GDP of the Nation
An analysis of the Ieral of the Mediterranean Foundation specifies that the provincial tax pressure increased continuously, from 3% in 2002 to 5.4% of the national GDP in 2017, basically driven by the Gross Income tax, considered a distorting tax and of “cascade effect”, since it is applied at each stage of the production process. Its incidence went from 1.8% of GDP in 2002 to 4% in 2017, to decrease, based on the 2017 Fiscal Consensus, to 4.8% in 2019 and rise again in 2020 (5%).
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