Income tax
The destruction of the national statistical system was extremely grave and its reconstruction will require long time and lot of effort. During the transition, the data produced by INDEC has limitations. A specific example is the large share of people who do not report their income in the Permanent Household Survey. The high and heterogeneous number of incomplete surveys requires extreme care in the analysis of important and sensitive issues such as the incidence of poverty.
VER
The Argentinean Sales Tax is a factor of decadence. But it has political appeal because the population is not aware of its burden and is very easy to collect it since most of its revenues are raised in advance through a complex system of withholds executed by the same tax payers. The Court’s pronouncements against the Sales Tax and the expiration of the Financial Transactions Tax are a good opportunity to create a unique VAT that absorbs the Sales Tax.
VER
The government has established a decrease in the income tax for a group of workers compensating the revenue loss by increasing other taxes. The design of the tax change is technically poor. On one hand, it temporarily reduces tax pressure only on some wages, as sustained inflation will raise it again. On the other hand, it intends to create new taxes that will leave Argentina out of place in the regional competition for new investments. The most troubling issue is that neither the ruling party nor the opposition is showing signs of thinking innovative ideas.
VER
Between one-fourth and one-third of formal employees pay the income tax. But taking into consideration the workers in the informal segment of the labour market, who generally perceive low wages, the impact of the income tax is reduced to only 10% of the total workforce. In this context, by trying to downsize the incidence of the income tax without first reducing unproductive government expenditure -like the one which is being proposed by the opposition- is a regressive change in the tax system since it necessarily leads to an increase in the burden of other anti-poor taxes, such as the inflation tax, that relies heavily in the budget of the poor households.
VER
