The Argentine Senate, after the Chamber of Deputies, voted on Friday a law instituting an extraordinary tax on large fortunes, concerning some 12,000 people, in order to fight against the coronavirus epidemic and help the poorest and small businesses.
This tax, defended by the majority supporting President Alberto Fernandez, is supposed to bring in some three billion dollars.
“No one should sell machines or land,” assured the director of the Argentine tax authority, Mercedes Marco del Pont, in a country where the wealth is above all that of large agricultural producers.
The tax will only affect nearly 12,000 taxpayers, holders of liquidity greater than 25 times the amount of this tax, according to Ms. Marco del Pont. This new tax has, however, been strongly criticized by the liberal opposition of the Juntos por el Cambio (Together for Change) movement of former President Mauricio Macri, which considers it “confiscatory”.
Some 40.9% of the 44 million Argentines live below the poverty line, the unemployment rate exceeds 10% and the economy has been in recession since 2018. Argentina’s gross domestic product (GDP) is expected to fall by 11% this year, according to the Central Bank, due in particular to the epidemic which killed more than 39,000 people and infected 1.5 million people.
Some 20% of the proceeds from this tax will help the health system, 20% help small and medium-sized enterprises, 15% social assistance, 20% scholarships for students and 25% companies in the natural gas sector.
Argentina’s most important employers’ body, the Argentine Association of Entrepreneurs (AEA), criticized the measure which, she said, “affects private property, hits investment, production and employment and arouses great discouragement ”.
The president of the powerful Argentine Rural Society, which represents agricultural producers, said he was afraid that this “extraordinary” tax would become permanent.
“We want to present (this tax) as a contribution from the richest, but we know what is happening with these single taxes, they are there forever,” he said.
But for Hernan Letcher, director of the Center for Economic Policy Studies (Cepa), this tax has nothing specific to Argentina when “at least 11 countries in Europe and Latin America,” says he, seek to reduce inequalities through taxation.