According to a study on 190 countries prepared by Price Waterhouse for the World Bank, Paying Taxes 2018, Argentina continues to be the second country with the highest “total rate of taxes and contributions” that companies must pay; only surpassed by the Island of Comoros, located between Madagascar and the African continent. In addition, the same report estimates that 312 hours are required to pay all taxes, that is, the equivalent of 39 business days.
The complexity and disproportion of our tax-oppressive system is the explanation of why we have more than a third of our economy in an informal economy. President Macri himself acknowledged the problem when he said verbatim: “taxes are killing us”. But his reform proposal was too gradual. In the best case, when the reform ends in five years we will only have improved some places in the ranking. When you are in the worst place in the table, courageous and ambitious reforms are needed to achieve a change that generates an investment enthusiasm.
Keeping taxes low so that the people can get rich is a maxim of universal wisdom that we can trace back to Lao Tsé, the author of Tao Te King, who recommended to the authorities: not burden the people with taxes. “People are hungry because the authorities charge too much taxes.”
In “The wealth of nations” Adam Smith said, “even a bad sovereign feels more compassion for his people than you can ever expect from tax collectors.” He knows that the permanent greatness of his family depends on the prosperity of his people, and will never consciously ruin that prosperity, for the sake of a momentary interest of its own. But governments that last only four years tend to forget these principles.
Alberdi asked for low taxes so that the country can finance itself easier.
In Argentina, was the father of our Constitution, Juan Bautista Alberdi, who understood the tension that exists between the need to finance the State and the freedom and prosperity of the people.
Alberdi maintained on numerous occasions that it is preferable to charge low taxes so that the Nation is rich and, in this way, the State can be easily financed. “It is preferable to collect a little from many that to collect a lot from few.” That is why he limited the taxes that can be collected in the 4th article of the Constitution. Regrettably, Carlos Pellegrini already violated this article because of the crisis of 1890, and only in 1927 the Supreme Court admitted that these taxes were unconstitutional. He admitted them in any way because otherwise it would be impossible to finance increased public spending. That was called “de Facto Doctrine”. Then, from the crisis of 1930 a series of tax inventions began, starting with the tax on revenues, which were justified in the economic emergency, which was called “Emergency Doctrine”. Since then we have lived “de facto and in an emergency”.
The old wisdom is imposed and while we maintain this immense tax pressure, Argentina will continue in decline.
The 1994 Constitution admitted the prerogative of Congress to create new taxes that should be distributed according to a new law of Federal Co-participation, which was never elaborated. So the entire system is breaking the Constitution.
Moving away from the principles of Adam Smith and healthy economics, our tax system is based on the ideas of Colbert, who only wanted to enrich the absolute monarch, Louis XIV, without worrying about the welfare of the people. That’s why I said, “Majesty, the art of collecting taxes consists of using the same technique used to fleece a goose: you have to remove it little by little and in different parts of the body, the largest number of feathers with the least amount of squawks. “
Modern tributarists know these principles as the “tax multiplicity” described in the theory of the New Keynesian Richard Musgrave.
But the old wisdom is imposed and while we maintain this immense tax pressure, Argentina will continue in decline. Among the contemporary authors, Arthur Laffer recovered the old notion of showing that increasing the amount of taxes or tax rates, in the long run, produces poverty and reduces tax collection. Of course, Laffer himself recognizes that the idea is not new and shows as ancestor the Muslim philosopher Ibn Khaldun (1332-1406) in his work “The Mugaddimah”.
In any case, Laffer brings to light something that is obvious: if we were to collect 100% of the profits, the collection would tend to fall to zero because nobody would be interested in producing. So there is a tax rate that, once exceeded, tends to reduce tax collection. That tax level has already been exceeded a long time ago in our country.
In his book “Taxes and poverty”, Antonio Margariti shows a list of 96 taxes and fees, national, provincial and municipal, which we attach by adding four new taxes that allowed us to reach the one hundred tax.
To get out of decay, Argentina requires a tax oversimplification, to dramatically reduce the pressure and complexity of our tax system. Obviously, for this to be possible, it must be accompanied by a reform of the State that allows reducing public spending.
We close with a complete list of 100 taxes, fees and contributions that destroy Argentina’s competitiveness.
- Income tax on natural persons.
- Corporate income tax.
3. Minimum presumed income tax.
4. Tax originated in the prohibition of adjustments of Financial Statements due to inflation.
5. Tax for adjustments in transfer prices.
6. Export rights.
7. Withholdings for agricultural exports.
8. Import rights.
9. Customs fees.
10. Import VAT.
11. Statistical rate.
12. Tax on freelance.
13. Withholdings on salaries for ANSES.
14. Withholdings on salaries for PAMI.
15. Expropriation quota retirement savings ex-AFJP.
16. Employer contributions for ANSESS.
17. Employer contributions for PAMI.
18. Contributions for family allowances.
19. Fee for anticipation of simple labor dismissals.
20. Fee for double indemnity provision.
21. Occupational accident risk forecast charge.
22. Contributions for trade union unemployment funds.
23. International freight tax.
24. Tax on the transfer of real estate.
25. Tax on debits and bank credits.
26. VAT on services to 27%.
27. VAT on purchases at 21%.
28. VAT on purchases at 10.5%.
29. Tax on gas and liquid fuels.
30. Rate of kerosene, gas-oil and diesel-oil.
31.Internal taxes: to tobacco; alcoholic drinks; beers alcoholic beverages, syrups, extracts and concentrates; insurance; cellular and satellite telephone services; Champagne sumptuary objects; and motor vehicles and engines, pleasure craft or sports and aircraft.
32. Additional cigarette emergency tax.
33. Tax on purchase-sale of shares.
34. Tax acquisition of new cars.
35. Tax on gambling prizes.
36. COMFER tax, radio and television.
37. Tax ITC fuel transfer.
38. Personal property tax.
39. Charge for overconsumption of gas and electricity.
40. Tax on motorway tolls.
41. Tax on financial income.
42. Wealth tax. It applies to cars over $ 70,000 (11% of the total amount).
43. Tax for the Emergency Road Agency. It was created at the beginning of 2008, due to the large number of accidents on the routes, and it is financed with an additional 1% to the Automotive Tax.
- Tax for water infrastructure.
45. Tax for Provincial Electricity Development Fund.
46. Tax Special fund large energy works.
47. Tax on tariffs for Secretary of Energy.
48. Tax on water, electricity, gas and telephone rates due to an increase in the gross income rate, taxes on banking operations that can not be counted as a tax credit and an increase in employer contributions.
49. Tax on electricity infrastructure in Santa Cruz.
50. Tax by Multilateral Agreement controlled by SICOM.
51. Provincial tax on amounts credited to accounts opened in SIRCREB banking entities.
52. Tax for operations in other provinces by SIRCAR collection and collection agents.
53. Gross income tax on gas transportation.
54. Tax provincial fund of compensation rates.
55. Tax from the residential subsidy trust fund.
56. Taxes in closed residential developments.
57. Substitute rates for other provincial taxes.
58. Provincial tax for the educational Fund.
59. Tax on provincial stamps.
60. Rate of judicial and administrative actions.
61. Provincial real estate tax.
62. Contributory rate of rural improvements.
63. Taxes on transport operations COT.
64. Tax for canon to Patagonian gas.
65. Tax on gross provincial income.
- Tax by DREI right of registration and inspection.
67. Municipal tax for advertising in Supermarket gondolas.
68. Municipal supply tax for perishable food brought in from other Municipalities.
69. Tax on non-resident suppliers for billing of supplies and services to companies installed in the municipality’s jurisdiction.
70. Municipal tax for infrastructure works.
71. Municipal tax for transportation of food.
72. Tax-municipal rate of cemeteries.
73. Municipal lien for public network servitude.
74. Tax for street lighting in electricity tariff.
75. ABL tax lighting, sweeping and cleaning.
76. Tax on automotive patents.
77. Tax on boats and aircraft.
78. Real estate tax.
79. Pavement and sewer rates.
80. Tax for laying a drinking water network.
81. Tax due to extension of the gas network.
82. Tax on vacant land.
83. Tax on unoccupied houses and apartments.
84. Tax on advertising on public roads.
85. Tax on advertising in filmed.
- INFLATION: it is the tax on the poorest.
87. Tax on the expired property rights of deceased authors more than 50 years ago.(The State appropriates it).
88. Complementary real estate tax Pcia. Bs As.
89. Municipal Fuel Rate.
90 Rate for maintenance access to Waterways.
91. Justice Rate.
92. Surcharge of Justice.
93. Airport rate.
94. Tax on the transfer of automobiles.
95. Seals on the sale of automobiles (after charging the tax on the car and the patent).
96. Contribution rate by SENASA technicians.
97. Bariloche charges an “Ecotasa” (which is actually a per capita tax to tourists). Misiones would charge a similar tax.
98. Obligation to pay guides to load farm.
99. INCAA movie tax.
100. Tax on the emission of carbon dioxide.
In addition there are other charges (some examples)
– AYSA obliges you to pay even if you do not want the service, even in garages without water.
– Gas – transportation tax.
– Gas – fiduciary fund subsidy art 75 law 25565
– Professional council of economic sciences: they force you to certify 5 balance sheets even if you do not specify.
Written by Agustín Etchebarne