Wednesday, June 3, 2020
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ECONOMY | 09-01-2020 15:28

Kicillof accuses opposition of ‘robbing revenue' after tax reform passes

Buenos Aires Province governor makes remarks after provincial legislature gives final approval to his tax reform package – but only after opposition senators amended original bill.

Buenos Aires Province Governor Axel Kicillof on Thursday accused the opposition of “robbing [the district of] revenues” in legislative amendments accompanying approval of his tax reform, passed Wednesday.

Such robbery was specifically on behalf of certain sectors, namely the largest property-owners, the governor further complained. 

"The idea had been to update urban and rural property taxation to last year’s inflation, – which through no fault of our own had been 55 percent – dedicating all the proceeds to production and jobs, although the opposition continues to leave us financially short,” the former economy minister said in an interview with A24 cable television channel. 

The State was best equipped to decide where to take from each according to their abilities and give to each according to their needs, he insisted, contrasting his approach to his predecessor María Eugenia Vidal, who had constantly favoured "the most concentrated sectors,” according to the Frente de Todos governor. 

Vidal governed according to a “highly flawed vision” based on trickle-down theories whereas "we say that there has to be a domestic market and that’s good for the middle class," Kicillof maintained.

The governor also described the foreign debt left behind by Vidal and the previous Mauricio Macri Presidency as "a tourniquet for national and provincial funds," making it imperative to find ways of preventing revenues from going on the payment of interest, while also adding: “Nobody wants a default.” 

Amid news that the province's authorities were seeking talks with creditors ahead of debt repayment due this month, he declared himself open to negotiations with creditors but they needed to understand that the growth of the debt was also their fault.

TAX REFORM APPROVAL

On Wednesday, the provincial legislature gave final approval to the tax reform after the provincial Senate amended the original bill before approving it.

Kicillof hailed the reform as “maintaining last year’s revenues in real terms while adding an element of progressive segmentation” but was more critical the next day, singling out the amendments increasing the discount for single tax payments while reducing the gross earnings rates for cable television operators, importers and exporters as “favouring the concentrated sectors”

"They accused us of wanting to impose massive taxation hurting the middle class and of not seeking consensus. But now we see that they were only defending the big fortunes. Our government has different priorities."

The Senate amendments had the effect of reducing the number of properties subject to the maximum increase of 75 percent from 2.6 million to 600,000 while also increasing the discount for immediate tax payment from 20 to 25 percent.

Other amendments toned down the port surtax on loading and unloading grain as well as holding the line on the taxation of gross earnings at 1.5 percent for the manufacture of pharmaceuticals and 3.5 percent for professional services (the original bill had proposed percentages of 3.5 and 4.5 percent respectively). None of these amendments encountered any resistance when the bill was returned to the lower house.

DIFFERENCES

When the original bill was obstructed in the provincial Senate last month by the Juntos por el Cambio opposition denying quorum, Kicillof himself proposed nine concessions to narrow the differences.

These included exempting pensioners drawing the minimum retirement benefit from urban property taxation, lowering the calculation of gross earnings for professional activities and retail sales, extending the benefits for PyME small and medium-sized companies in the agricultural sector, exemptions for NGOs and relaxing automobile taxation among others.

This would leave provincial revenues constant while having those who owned the most contributing more and adding benefits for pensioners, volunteer firemen, etc.

A24 also asked Kicillof how he proposed tackling the chronic problem of teachers’ salaries. This issue is much bigger than pay, including questions like school infrastructure, he replied.  

– TIMES/NA
 

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