In the best traditions of declaring an interest, a newspaper calling itself “Buenos Aires Times” should preface any editorial on the cuts inflicted this week on this city‘s slice of federal revenue-sharing with an admission of a natural bias against this move stemming from our place of publication before attempting an analysis looking beyond parochial or personal criteria. Those analysts who would denigrate the motives for this legislation are not wrong – it can indeed be denounced as a classic example of the “politics of envy” denounced by Winston Churchill over seven decades ago in action, mobilising a stricken Greater Buenos Aires against an “opulent capital” while at the same time whittling away the financial base of the runaway opinion poll leader (City Mayor Horacio Rodríguez Larreta) in some anticipatory electioneering. Yet any analysis from within this metropolis which does not proceed beyond these points risks looking like the sour grapes of spoiled children.
Regardless of whether this bill is fair play or not, the underlying problems of federal revenue-sharing nationwide are not resolved by rewinding the City’s slice back to 2015, returning it to the 1.4 percent preceding the Mauricio Macri presidency from the 3.75 percent decreed in 2016 (3.5 percent as from 2018) on the grounds of transferring the financing of policing from federal to municipal hands with the creation of a metropolitan police force. The ruling coalition deputies who argued that almost trebling the federal remittances to this City was wildly overshooting the costs of policing might well be right but even 3.75 percent falls absurdly short of the almost quarter of the nation’s revenue collected in its capital.
Yet these figures are also relative to over a quarter of Argentina’s wealth being concentrated in this city – opulent indeed as a First World island amid broad swathes of Third World in this middle-income country, even if badly hit by the pandemic like everywhere else – and also to the extreme generosity of the transport and other subsidies enjoyed by its citizenry (50 times as high as those going to the province of Santa Fe with a slightly higher population).
If policing was the trigger for Macri’s increase, it was also the catalyst for the current cut in City funding – the virtual mutiny of the Buenos Aires provincial police pressing pay demands last September prompted President Alberto Fernández to activate the transfer (promised during last year’s campaign but placed on hold due to the pandemic) in favour of an impoverished district which is also the main electoral bastion of his Frente de Todos coalition. Social justice at first sight, although the equality of levelling everybody down to poverty is not necessarily the best alternative to extreme income disparities if wealth for all is impossible.
Yet there is also a need to look beyond the eternal rivalry of Buenos Aires City and Province to the nation as a whole. This is not a simple zero-sum game of robbing Peter to pay Paul between a middle-class city and a Peronist province.
Thus under Macri this city’s gain was not the province’s loss – the latter also upped its federal revenue-sharing slice from 18.5 to 22.2 percent between 2015 and 2019 while conversely the pre-Macri Kirchnerite Buenos Aires Province governor Daniel Scioli was starved of funds with his own party in power. Instead of constantly fighting each other, both regions should wake up to the fact that they only receive around a quarter of federal revenue-sharing between them while accounting for almost two-thirds of taxation and economic output.
Such a gross disproportion in favour of the inland provinces is not necessarily a bad thing because without it some regional economies outside the fertile pampas might collapse altogether, making this country even more absurdly over-centralised. Yet this year’s pandemic has exposed how artificial this system is – provinces like Formosa and Santiago have been able to maintain inhuman quarantines because they need not worry about their economic impact with almost all their money coming from the national Treasury.
In conclusion, having declared an interest, we still feel entitled to decide against these cuts – not because of whether they are fair or unfair or whether this city is privileged or not, but because they are unilateral and not holistic. There can be no solution beyond a general reform of federal revenue-sharing embracing all provinces and levels of government – something which more than a quarter-century after being stipulated by the 1994 constitutional reform still goes begging.