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ARGENTINA | 12-09-2020 09:00

Opposition anger at ‘unconstitutional’ federal revenue-sharing move

Buenos Aires City Mayor Horacio Rodríguez Larreta said the president had chosen “division” over “dialogue.”

Opposition lawmakers this week reacted strongly to President Alberto Fernández’s decision to dock the Federal Capital one point of federal revenue-sharing funds to meet the pay grievances of the Buenos Aires provincial police.

The decision, announced Wednesday night and followed up by a decree the following day, drew criticism from leaders from all parties and sectors of the Juntos por Cambio coalition.

The immediate reaction of both City Hall and the national opposition leadership was to take the issue to the Supreme Court, insisting that it was "unconstitutional" to transfer federal revenue-sharing percentages by decree.

Speaking at a press conference, Buenos Aires City Mayor Horacio Rodríguez Larreta said the president had chosen “division” over “dialogue.”

"The decision taken by the national government is unconstitutional and we are going to go to the Supreme Court," said the City mayor, who reportedly reacted to the news by calling it “a betrayal.”

"All my life I chose the path of dialogue,” he added, saying he had put “aside all political differences” to work with Fernández and Buenos Aires Province Governor Axel Kicillof on Argentina’s debt restructuring talks and battle against the coronavirus pandemic.

"Unfortunately what we experienced yesterday is exactly the opposite of dialogue,” said Rodríguez Larreta, describing the decision as “improvised.”

For his part President Fernández said Thursday that the move was neither sudden nor provocative, pointing out that a federal revenue-sharing reshuffle had been the lead issue in pre-pandemic talks with the Juntos por el Cambio leader.

Seeking to play down the row, Fernández said he had “sent a text message to Larreta to calm him down," while underlining that reproaches of the capital’s “opulence” were not aimed at the mayor personally or even Mauricio Macri (the predecessor of both men) but against an injustice dating back centuries.

"It was a decision which we had almost taken and much conversed with the mayor but we postponed it when the pandemic came along. But suddenly this demanding situation in Buenos Aires Province appeared with no other solution than to take this decision. But nobody can be surprised by this," he told Radio Con Vos.  


‘No surprise’

Former deputy and 2007 presidential runner-up Elisa Carrió, the founder of the Civic Coalition party in the opposition coalition, argued that the Federal Capital was being short-changed with its current 3.5 percent of the federal revenue-sharing pie, given that it contributed 22 to 25 percent, never mind the 2.32 percent decreed in midweek. But she also commented that the presidential move was "no surprise."

Describing the presidential decree as "the opposite of dialogue,” Patricia Bullrich, who chairs the PRO centre-right party and tested positive for coronavirus earlier this month, tweeted: "Between those who live and work in the City there are around seven million people who could be damaged. You do not build Argentina by confronting the City and Province of Buenos Aires. That perverse logic impoverishes the country more every day."

Radical party chairman Alfredo Cornejo told Radio Mitre that "if Greater Buenos Aires is not opulent, Kirchnerismo is in large measure responsible," claiming that Vice-President Cristina Fernández de Kirchner had ordered national government to beef up the province led by Kicillof, a close ally.

"Buenos Aires Province has been gifted 64 billion pesos by @alferdez while money is distributed to other provinces as loans. The police situation is not the fault of funds lacking but the dire awful administration of @Kicillofok," the former Mendoza governor tweeted.

He later told the TN television news channel that "President Fernández has transformed himself into the president of Buenos Aires Province, not Argentina."


‘Sectarian and petty’

Radical deputy Facundo Suárez Lastra (himself a City mayor from 1987 to 1989) was slightly more charitable towards the Province. 

“It’s absolutely fair and reasonable to give a further point to Buenos Aires Province, in fact it should be given a whole lot more. What is unfair, unconstitutional and illegitimate is to take it away from Buenos Aires City, which also lags in relation to what it contributes. 

“What kind of law professor is this?! The government has just shot itself in the foot. The funds should have come from the national government, which does not have to pay for schools or hospitals or police but instead they prefer to use the money to finance a judicial reform to give impunity to the corrupt. It’s inadmissible, sectarian and above all petty," he declared.

The Civic Coalition’s new leader Maximiliano Ferraro tweeted that the decree was not robbing an opposition political party of budget but rather "health, education, culture and policing," describing the move as “a vindictive and punitive attitude which we saw coming.”

 “To cover up the ineptitude and inefficiency of Governor Kicillof, over 35 billion pesos are being taken away from the porteños,” he added, appealing to Fernández to live up to his professed penchant for dialogue.

“In 2016 the [19,000-stron] Federal Police were transferred to us with the corresponding funds, as established by the Constitution. All the transferred funds are exclusively destined for the City Police. For that reason, the federal revenue-sharing index of the City of Buenos Aires (CABA) rose from the historic 1.4 percent to 3.75 percent. Following the Fiscal Consensus agreements, the CABA coefficient was reduced to the current 3.5 percent,” Ferraro explained. 

“The City generates 80 percent of its total income while only 20 percent corresponds to federal revenue-sharing and other transfers. In most provinces it is completely the other way round,” he concluded.

Senator Martín Lousteau (City-UCR/Evolución) insisted that the Supreme Court could not remain silent. The former Economy minister described the presidential move as an "arbitrary, abrupt and totally questionable decision to hit Rodríguez Larreta and punish the most important jurisdiction governed by the opposition." 

Lousteau said that President Fernández had no better motive for transferring the funds than extortion by the provincial police, having no hesitation in calling the initiative "unconstitutional."


Lack of consultation

The opposition also complained about not being consulted – PRO mayors Jorge Macri (Vicente López) and Néstor Grindetti (Lanús), who were invited for the announcement along with some 20 other mayors, said that they had no idea what would be announced while Rodríguez Larreta said that he had been informed by Interior Minister Eduardo "Wado" De Pedro three minutes beforehand. 

The mayors said that the economic and financial problems of one province were not resolved by taking away funds from another district, especially in a health emergency.

The protests were not limited to opposition leaders – following the presidential announcement of the transfer of federal revenue-sharing funds from City to Province to calm the provincial police unrest of the previous three days, cacerolazo saucepan-bashing by ordinary citizens began around the Federal Capital. 

Some analysts saw the police crisis as an excuse to chop the Capital Federal down to size, a plan harboured by Vice-President Cristina Fernández de Kirchner all along. President Fernández had already pressed this issue in the first weeks of his term but the pandemic cut short his plans. 

In a column for Perfil, Facundo Falduto drew attention to the inauguration of La Matanza Mayor Fernando Espinoza last December 12, in which Cristina Kirchner compared La Matanza’s budget of 10 billion pesos with the Federal Capital’s 350 billion pesos serving the same size of population (according to the vice-president – in fact Buenos Aires City has over a million more inhabitants) while Buenos Aires Province has a budget of 650 billion pesos with six times the population – such “profoundly unfair” inequality must be corrected, the ex-president insisted at the time. 


Details of the decree

According to Decree 735/2020 published in the Official Gazette in the small hours of Thursday, Macri’s decree 194/2016 increased the federal revenue-sharing funds received by the City from just under 10 billion pesos to 26.7 billion by hiking its cut from 1.4 to 3.75 percent, a share which Thursday’s decree cuts to 2.32 percent. 

This imbalance, the decree’s text reads, "deprives the National State of the funds necessary to be able to move ahead with essential policies to correct the structural inequalities which today have become evident and whose correction is imperative."

 Although triggered by the police unrest in Buenos Aires Province, the decree does not specifically allocate any money to meeting their pay grievances but creates a fiscal reinforcement fund "whose object is to contribute to sustaining the normal functioning of the finances of the Province of Buenos Aires." 



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