Axel Kicillof pushes tax increases for private banks and Internet providers

With the consensus of Governor Axel Kicillof, legislators from the Everyone’s Front are preparing a bill to apply in the Province an extraordinary increase in Gross Income on private banks, which would take the rate from 7% to 12%.

The proposal in preparation will have its entry by Deputies. It includes other modifications in various items and foresees an additional, due to an increase in collection, of $ 5.7 billion for the treasury. It would apply for this year.

The latest economic news and the analysis of Daniel Fernández Canedo.
This Monday, the president of the Chamber of Deputies, Federico Otermín, was with collaborators of Axel Kicillof to advance the initiative.

The objective, according to the arguments in the FpT block, is the creation of a “Covid-19 Solidarity Fund”, aimed at boosting resources for hospital infrastructure, provision of health services and assistance for vulnerable sectors and for agents of activity economic.

The reform proposes a rise in Gross Income for financial institutions, “most of which multiplied their profits during this year 2020 and while the quarantine of COVID 19 is passing,” they assure from the bench.

In addition, among the articles of the project, an increase is also foreseen in the IB rate for “Internet access provider services”. In this case, from 4% to 6% as long as they have declared income of more than 500 million pesos in 2019.

It extends the reform, including, with a rise in the aliquot to the manufacture of insecticides, pesticides and chemical products for agricultural use.

They also promote the reduction to 0% of all the aliquots of all the sectors of taxpayers with incomes less than 500 thousand pesos in 2019.

The project would have a “celerísimo” treatment in commission, once the process was completed at the entrance table. The president of the FdT bloc, Facundo Tignanelli, has just committed the approval of his parliamentary representation. Although the approval process in the Legislature will be complex, it reveals a preliminary course of the Executive in search of own resources.

In the last two months, taxation in Buenos Aires has plummeted almost 30%. Gross Income is the tax imposed on economic activity. It contributes 70% of the total perceptions of the Buenosairean treasury. It already came with recessive effects before the pandemic. The virus deepened the shortage.

Hence the need for additional silver. The national government’s aid limitations contribute to these Kicillof constraints. One fact: industrial activities are rapidly being enabled in the Province. Production gets empowered. But consumption falls apart.

The “extraordinary” character that they confer on this tax adjustment, according to the foundations, is accelerated by other evidence: the projected primary deficit would reach 7%.

Already in April, the deputy Francisco Durañona (FdT) had presented a project to increase, also “temporarily”, a rise in Gross Income for large taxpayers. At that time cable companies were included. It is not resolved if the aliquot update is maintained in the new project.

The deputy Valeria Arata will try to homogenize, in a single project, the different elaborations that exist in the block.

The idea would be to set at 12% the rate applicable to “retail banking services, except those corresponding to interest on capital adjustments of mortgage loans granted to individuals, for the purchase, construction, expansion or renovation of housing unique, family and permanent occupation, “they explained in parliament.

Buenos Aires is not the only district that looks at financial entities with fiscal relish. Pampan Governor Sergio Ziliotto obtained approval from the Legislature for the sanction, in April, of an IB increase of 9% to 14% to private banks. “They are moments of solidarity; those who won the most have to contribute the most ”, he mentioned then. In very similar terms to the ruling parliamentarians of the province of Buenos Aires.

This Monday, Otermín sought an argument for the project: “This unprecedented global crisis revealed deep and pre-existing inequalities. We have the historic opportunity to transform them,” he said almost as a formality.

Alexander Baker

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