URGENTE 24 – The statement of President Alberto Fernández about the supposed “opulence” of the City of Buenos Aires, the solution to the problem of resources to attend to the claim of the Buenos Aires Police and the subsequent debate because it was made at the expense of money from the City Autonomous, it updated a problem that seems without solution: the Federal Tax Co-participation Regime. To all this it is necessary to remember that the President of the Nation has expressed his desire to enter history as the most federal head of state. Gathering all these data it is interesting to read the work of a study center released hours ago. Sick of preconceptions, stigmas and ‘clichés’ there will be no shortage of people who anticipate “Ah, but there’s So-and-so” or “Naaaa, those are liberals” (to say the least) but it is very interesting to know him and it would be horrible if the itches promote our ignorance.
Manuel Solanet Content
If meritocracy were a reality in Argentine society, it would be interesting if someone could contribute a deeper and more precise knowledge of the Federal Tax Coparticipation than the engineer Manuel Solanet.
Of course, someone will always appear raising some reason to reject any intellectual contribution that is not their own, but the Machine of Making Ignorant is killing us as a society based on the stupidity of building the future on the service sheets and files that, in addition, on many occasions they are unfair because our own ability to build our history is in doubt.
Let’s get down to it: until 1934 there was no Federal Tax Coparticipation. The Argentine Republic existed without a co-participation regime, recalls Solanet, and the chronicler adds that there was no Central Bank either, created in 1935. Solanet comments that it is true, that they were born almost together.
Each province had its tax regime and the Nation had its own, and what was had was spent.
On the occasion of the Income Tax, created to face the consequences of the world crisis of 1929, the debate took place as to who would appropriate the collection.
The “Income Tax Regime” (Law No. 11,682) was sanctioned during the presidency of Agustín P. Justo, and included the creation of the General Directorate of Income Tax (today AFIP).
The parties concurred before the Supreme Court of Justice of the Nation, which imposed as the first condition that it should be transitory -until 12/31/1934, a limit never met by the parties and forgotten by the CSJN itself-, and then that the provinces perceive , in condition of return, 17.5% of the proceeds.
Solanet recalls that this is how co-participation was born, which progressively was transferred to more taxes, which also increased in quantity, until reaching the deformed, discretionary and conflictive regime in force, which also fails to cover the impressive public spending that already before the emergency caused by the pandemic was difficult to finance with genuine resources.
Solanet points out that what the Fundación Libertad y Progreso proposes is to return to the origin, and with a system of incentives to spend well because it is spent badly and that forces more taxes and more co-participation, which is also arbitrary.
The comment is reasonable: everyone knows that the Frente de Todos wants to limit the financing capacity of Horacio Rodríguez Larreta, who is almost certainly presidential in 2023.
The underlying problem is not the abuse that the provinces make of the Autonomous City, which then has a solid argument to maintain the deformation in terms of quality of life that arises from continuing to authorize towers that allow it to multiply the income for Lighting, Sweeping and Cleaning, which is your strongest fundraising tool.
The underlying problem is that the provinces are not obliged to be efficient and limit their public spending or to review it for an appropriate use of the resources of taxpayers / citizens / voters / users.
Does Alberto Fernández want to be a federalist President? Well, there is the proposal that Solanet and the other economists of the Foundation made: Transfer to the provincial governments the collection of taxes generated in their territory: Profits of individuals, Fuel, Personal Assets, Internal.
Does Alberto Fernández want to enter history as a reformer of the tax regime? Another proposal: Replace the provincial tax on Gross Income with another applied to Final Sales and calibrate its rate with that of VAT (national) to achieve a primary distribution between Nation and Provinces that connects with that resulting from the Coparticipation regime valid.
The objective is simple: to suppress the vertical partnership between the Nation and the provinces.
Then, work on a mechanism so that no province neither wins nor loses with the change.
To do this, create a Fund, fed with the Fuel Transfer Tax, for horizontal redistribution between provinces, with compensatory percentages that will remain unchanged over time.
What is the purpose of unchanging? That any increase in spending by a province, over its collection, will require it to have to resort to additional provincial taxes.
there will be incentives for provincial governments to spend less and more efficiently;
the tax revenues of each province would be predictable; and
The National Government could not carry out abusive acts such as reducing the percentage of secondary distribution of a politically adverse government.
It is not difficult, it only requires political decision.
Do you have a simpler and more efficient proposal in the National Executive? Ahead. Otherwise you will find the one that appears in this note.
Why wouldn’t the provinces accept it if they don’t compromise their present income?
It is time to start studying the future seriously because it looks complicated to the extent that taxpayers are fed up with the little consideration from the Treasury, and there is periodic institutional discomfort between the nation and the provinces because of what is happening.