Tuesday, June 25, 2024

OP-ED | 29-10-2022 06:00

Budget or judge it (or fudge it)

It looks like Argentina will have next year the Budget which it never could in this – that is the main upside after long hours of parliamentary debate which have done nothing to redeem politics from its current disrepute.

If the expected Senate approval transpires, Argentina will have next year the Budget which it never could in this – that is the main upside after long hours of parliamentary debate which have done nothing to redeem politics from its current disrepute. Such was the perversity that myriad sideshows pressing petty sectorial and political points managed to steal centre stage from the original draft budget itself projecting an absurdly undershooting inflation of 60 percent – that budget in general and that inflation projection in particular (giving the government free rein over all the revenues above that percentage) should always have been the central issue.

Myriad sideshows stealing centre stage but one in particular. Facing an original budget with flawed projections peppered by dozens of often outrageous added articles, the opposition incredibly allowed itself to be distracted by the red herring of judicial branch taxation. A tremendous media buzz arose whereby taxing judges was malicious Kirchnerite payback for the corruption trials against the vice-president and her acolytes, an interpretation premised on the obsessive notion that all the country’s problems revolve around Cristina Fernández de Kirchner. Yet the taxation of judges began with a bill (albeit not retroactive) introduced by the Mauricio Macri presidency in late 2016 and passed by Congress in early 2017 – nothing very Kirchnerite about that and nothing unreasonable either, given that the monthly salaries of some judges reach seven digits.

This red herring (in any event doomed to failure with even the left voting against in defence of humbler court employees amid their general rejection of an “austerity budget”) covered a multitude of sins, many of them pushed by trade unions – it remains to be seen whether provincial lobbying along similar lines arises in the Senate. Perhaps the most egregious was Article 104 which stipulated that the income tax floor of 350,000 pesos for everybody else should be 440,000 pesos for teamsters – a case of the Moyanos blatantly throwing their weight around in a week in which they were blackmailing their way to a three-digit pay increase by threatening to bring the entire country to a halt. Another case in point was a 250-peso surcharge on airline tickets earmarked for the payment of the airport police.

Other additions which should have been more controversial than they were included upping the excise on electronics from 17 to 19 percent while halving it or even removing it for the Tierra del Fuego industry (which assembles imported inputs) and increasing the contributions of the self-employed to the union-run healthcare funds. Whitewashing the repatriation of money for investment in construction has obvious points in favour, given the country’s acute housing shortage, but remains controversial. Dozens of petty items which in isolation only account for the tiniest of percentages of the economy (and that includes the blanket taxation of judges) but together contribute towards a public spending of 29 trillion pesos, all approved in the small hours of Wednesday when most of the citizens paying for it were sleeping.

Polarisation is quite rightly deplored as the cardinal sin of Argentine politics but, quite apart from the strong challenges to the two main coalitions being mounted by the libertarian right and the far left, the budget vote exposed alarming fragmentation among those coalitions. Máximo Kirchner, who chaired the Frente de Todos caucus at the start of this year, shunned the entire debate, only showing up to vote at the last minute. The three main parties of the Juntos por el Cambio opposition coalition each adopted a different stance – the Radicals voted in favour and the Civic Coalition against while PRO abstained. These are only the most important examples of a fragmentation where (as with this budget saga as a whole) the sideshows sometimes spoke louder than the centre stage.

And at the end of the day much ado about nothing. Over the years the budgets have ritually presented their estimates of growth, inflation, exchange rates, etc., only to become dead letters in the following year although the mistakes (especially undershooting inflation in order to place the extra revenues beyond the reach of Congress as potential slush funds) can have consequences. And this budget is more vulnerable to becoming grandly irrelevant than most because 2023 happens to be an electoral year.  


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