The small print of the International Monetary Fund (IMF) agreement with the Government of Javier Milei indicates that the administration must reduce tax expenses that “contribute to inequalities” and that make the Treasury lose 3.5% of GDP, that is some 21,000 million dollarsand that mean privileges and tax exemptions to more than 50 sectors of the country’s economy.
On page 43 of the IMF document, which signed the Minister of Economy, Luis Caputo, and the managing director of the Fund, Kristalina Giorgieva, the need to reduce this tax expense is expressly mentioned and refer, as an example, to the regime of Tax exemptions in Tierra del Fuego.
“In particular, it is necessary to reduce tax expenditure (estimated at 3.5% of GDP), which only benefits certain groups or regions,” the text said.
“Fiscal exemptions (including those destined to support production in regions such as Tierra del Fuego) also contribute to inequalities“, said, forceful the IMF. The Taxation of Tierra del Fuego benefits implies a loss of collection for the treasury of 1.3 billion dollarsaccording to the Association of Argentine Electronics Terminal Factories (Afarte). According to estimates on the 2024 budget project, up to 2,000 million dollars could reach.
Reduction of tax expenses: the privileged sectors to which the IMF points out
Consulted by iprofesionalsources of Afarte pointed out that “the Industrial Promotion Regime of Tierra del Fuego You cannot look with exclusively fiscal eyes. It has an objective that goes beyond the economic, which is to generate economic activity and population roots in a geopolitically strategic area. “
However, Tierra del Fuego is not the only regime of tax privileges, Founded on the need to promote industries or sectors, some justified, such as health, culture and education, and others in a discretionary and strongly discussed way.
These last privileged sectors also include judges and officials of the Judiciarythat do not pay profits and have very high salaries; The knowledge economy, mining, owners of rural properties, business directors, dividend distribution and other industrial promotion regimes.
Among tax exempted companies in the knowledge economy include Free market and globantamong which has more noticeable benefits or privileges. Also the IMF text recommends reorganizing exemptions in the sector of Energy and mining Given the creation of the new incentive regime to large investments (Rigi).
On its page 43 of the Agreement, the Fund points out: “From an equity perspective, the high dependence on indirect taxes, which represent more than half of all taxes, reduces progressivity, and tax exemptions (including those destined to support production in regions such as Tierra del Fuego) also contribute to inequalities.” At the end of the report it was overwhelming: “In particular, it is necessary to reduce tax expenditure (estimated at 3.5% of GDP), which only benefits certain groups or regions,” said the text.
The IMF technical report is very hard in criticizing national distortive taxes, such as retentions, check imposed, and provincials, such as gross income and high municipal fees.
But fiercely attacks tax spending. The Ministry of Economy in its latest Tax Expenditure report estimates it at 3.5% of GDP, about 21,000 million dollars. However, the 2024 budget project, which was never approved by the government of Javier Milei, estimated it at 4.72% of GDP, that is, about 28.3 billion dollars.
As reported in detail iprofesional On September 19, 2024, there are more than 52 regimes of tax privileges in Argentina that make up a fiscal hole of about 34 billion pesos, and that are discriminated against sector by sector. It is the fiscal adjustment that Milei was never encouraged to do: The expenditure in privileges to that “caste”.
However, sources of economy indicated that The last year, the Milei government strikingly withdrew some sectors of the “Tax Expenditure”, such as Tierra del Fuego, and put others instead, such as monotributistas, who do not pay profits, but in return they have a simplified regime and appear as privileged.
In the regime of Tierra del Fuego, by case, its company tax, VAT, gross income, internal taxes and import customs rights are exempted.
Javier Milei’s government has no political will to review these exemptions or those of any sector. The Fueguino regime was extended in 2021 for 15 years, until 2038, by the government of Alberto Fernández, denosted by Milei as the archetype of “La caste”.
As trusted to iprofesional government sources, The IMF put the deadline to review these tax benefits and privileges Since next November, that is, after the legislative elections of October 26.
The most benefited families with the tax exemptions of the Government of Javier Milei
The two families most benefited by tax exemptions (privileges) are those of Nicolás Caputo (Mirgor) and Rubén Chernajovsky (Newsan), Manufacturers of electronics products, cell phones, televisions and sound equipment.
They are attributed to ChierNajovsky very strong political links, especially with Peronism and Kirchnerism. The amazing prosperity of Chiernajovsky in full recession of Milei chainsaw allowed him to buy in 2024 Procter & Gamble and all the brands of mass consumption.
For its part, Nicky Caputo is a friend of former President Mauricio Macri, in addition to cousin of the Minister of Economy, Luis Caputo, and uncle of the presidential advisor Santiago Caputo, member of the “Iron Triangle” presidential along with President and his sister Karina Milei, Secretary General of the Presidency of the Presidency. But do not neglect businesses.
In 2024, Santiago Caputo appointed Noelia Ruiz, a PRO girl at the Administration Fund of the Fuegian Productive Matrix (FAMP) that handles $ 130,000 million pesos for projects such as the port of Mirgor in full cancellation of public works. That fund was also created by Alberto Fernández and never suffered the Milei chainsaw.
He Tierra del Fuego regime was created in 1972 In order to populate and promote the development of the island, a strategic objective that seems to have been fulfilled.
The tax benefits had been set in 10 years and was extending and today reaches several economic groups, including Newsan, Mirgor, BGH, Radio Victoria, Río Chico, Australtex, Ipasa, Samsumg, Fabrisur, Vinisa Fueguina, Electro Fueguina, Fueguino Dream, Tecnomyl, AIRES DEL SUR, ACSUR, SOLNIK, Total Austral, FAPESA, CARRIER FUEGUINA, TEXTIL RIO GRANDE.. Now, the IMF put their sights.
“Fund technicians tell the economic team ‘you ask us for money but give taxes to your friends,'” he trusted iprofesional A source close to the IMF.
The call for the care of the Government: eliminate taxes and withholdings
In the IMF and Government document, signed by both, the fund also attracts attention to the need for eliminate distortive taxes, export withholdings, check tax, provincial taxes that have cascade effect, such as gross incomewhich do not allow previous tax deduction.
It also requires reforming the federal tax co -participation from next November through which the provinces receive more than 60% of the Coparticipable Taxes of the Nation, such as profits, VAT and personal goods, while others are not co -participate, such as withholdings and the check tax. It also criticizes the Tax regime of provinces and municipalities And they say they hinder the development of the economy and urgently simplify them.
“The Federal Government has increased its dependent tax dependency non -co -participated taxes, and the provinces have increased taxes on gross income and other rates due to the decrease in federal transfers, which generates few incentives to cut the expense,” observes the report of the Monetary Fund.
The agency that lent 20,000 million dollars to the Government of Milei recommended or demanded since November a Neutral tax reform in terms of income.
“Gradually reduce distorting taxes on exports (withholdings) and financial transactions (check), replacing them with simpler and better managed direct taxes for homes and companies,” says page 43 textually.
It also points out the fund that the provinces charge many distortive taxes and that should improve collection with a better system of properties and assets records to improve collection on properties.
In addition, the IMF recommended progressively to the monotributists to the regime of the system of registered responsible for paying profits as self -employed and collecting greater taxes on energy and mining taking into account the advent of the rigi.
He also asked Eliminate little collectors, improve tax and customs administration and modernize tax information systems.
“The Argentine tax system remains excessively complex and distorting, with a general burden that hinders growth and competitiveness,” says the IMF report. “The tax revenues of the general government, which reached 22% of GDP in 2022, are among the highest regional standards, especially considering the narrow tax base of Argentina and low compliance, in the context of relatively high tax rates,” he said, on the tax pressure. “There are more than 155 taxes that increase the administrative burden, although only six of them (IRP, contributions to social security, VAT, financial transactions, export taxes and provincial tax on gross income) represent more than 80% of total tax revenues,” he said.
“From an equity perspective, the high dependence on indirect taxes, which represent more than half of all taxes, reduces progressivity, and tax exemptions (including those destined to support production in regions such as Tierra del Fuego) also contribute to inequalities,” he said, on the tax expenditure.
“The distorting tax agency is especially high, with export taxes, taxes on financial transactions and the provincial tax in cascade on the volume of business (which does not allow the deduction of taxes paid in previous stages) representing around a third of all taxes,” said the agency.
“In particular, it is necessary to reduce tax expenditure (estimated at 3.5% of GDP), which only benefits certain groups or regions,” he concluded.
