1 OUT OF 4 AGRI-DOLLARS GO ABROAD OR TO “UNDER THE MATTRESS”

The government wants to encourage people to use their savings freely without persecution by the State. The initial diagnosis is that the State’s voracious controls –to the point of distorting the principle of innocence in the sense of turning all citizens into suspects until they prove otherwise– torture people with a lot of information bureaucracy and very low efficiency in combating evasion and crimes. 

In this direction, it was decided to eliminate a series of information regimes that were applied for certain purchases and to limit those in charge of the banks, exempting them from doing so in the case of smaller amounts. It was also established that from the next fiscal year, the tax agency (ARCA) will be responsible for determining the income tax of individuals and, unless the taxpayer disagrees with it, no more information will be requested on the variation of personal assets or level of consumption.  

Having deployed this persecutory attitude had consequences and it can be measured, for example, with Argentines’ destination to their savings. According to data from the Ministry of Economy and the Central Bank for the whole period 2003 – 2024 it is observed that:

• Agricultural exports accumulated a total of 1.3 trillion dollars updated for U.S. inflation.
• The savings that Argentines accumulated in dollars abroad or “under the mattress” in a formal manner amount to 330 billion dollars. 
• This means that 1 out of every 4 dollars produced by agricultural exports went abroad or remained “under the mattress”.

These data show that Argentines chose to protect their savings by taking them abroad or to the mattress. Of the dollars generated by the agri-sector, the main source of dollars in Argentina, after the payment of imports, foreign tourism and interest on debt, the remainder was not invested in the country but accumulated outside the system. This phenomenon has a very negative impact on the economy. There are several reasons why Argentines do not invest in productive projects, but there is no doubt that the persecutory attitude of the State –suspecting citizens as delinquents– has deepened it. 

Abandoning the idea that evasion and crime are fought with bureaucratic controls is a step in the right direction. This should be complemented with intelligent controls. The State should take advantage of the enormous mass of information available to detect and combat crime. For this, it is essential to reconvert the State agencies. The most important of these is the tax agency (ARCA). It is an agency with a huge budget (it receives more resources from tax collection than 18 provinces through co-participation) and spends 83% on salaries and another 8% on expenses associated with its employees (janitors, security, etc.). The remainder for investment in new technology is marginal. The reconversion should also reach the Financial Information Unit (UIF), which is responsible for detecting money laundering and terrorist financing according to international rules.

Together with the elimination of information regimes that torture and intimidate the population with very low efficiency, it is necessary to migrate to intelligent controls. The challenge is not only to eliminate red tape but also to improve surveillance. One way is to focus the State’s internal controls on people with criminal records and qualified as high financial risk by Central Bank regulations.

These reforms should be part of a more comprehensive transformation of the public sector focused on simplicity and citizen empathy. A fundamental principle that should govern public management is that citizens’ information that is available within other state agencies should be prohibited from being requested again. Today the State requests countless times through different windows the same data and documents issued and approved by the same State (copies of ID cards, passports, vaccinations, social statutes, etc.). Eliminating the State’s torture of citizens requires more simplifying reforms.