Argentina Reports Tax Collection Spike

May 25, 2010 Taxation in Argentina

Cristina Fernandez de KirchnerThe Government of Argentina recently revealed its latest tax collection figures, showing a 30.7 percent increase in collections for the month of April.

On May 24th the Argentinean tax administration Administración Federal de Ingresos Públicos (AFIP) published the Government’s tax collection results. In April the Government collected ARS 30.1 billion (approx. USD 7.75 billion), representing a 30.7 percent increase from April 2009. Cristina Fernandez, President of Argentina, called the latest results “historic”, and further claimed that the increase displays the effectiveness and appropriateness of the Government’s policies.

The AFIP highlighted some of the most impressive increases including a 36 percent increase to income tax payment collection, to a level of ARS 4.24 billion (approx. USD 1.07 billion). Social security taxes also increased by 33.4 percent, to a total of ARS 7.5 billion (approx. USD 1.92 billion). Value Added Tax (VAT) payments rose to ARS 8.8 billion (approx. USD 2.25 billion), approximately 27 percent above the levels seen in April 2009. Taxation on exports rose by 30 percent, reaching ARS 3.9 billion (approx. USD 999 million). Additionally, the AFIP stated that the number of registered tax payers has significantly increased. Average salaries have also risen, due to several completed collective-bargaining agreements.

Despite the positive results, several economists are claiming that the AFIP is not disclosing the true causes of the tax collection spike. Private-sector economic research indicates that the nation’s inflation rate could be as high as 30 percent, largely explaining the new levels of tax collection. The Government of Argentina has maintained that the rate of inflation has not exceeded 10 percent. Bertrand Delgado, Senior Economist at RGE, explained the significance of the discrepancy, saying, “… unless fiscal spending continues growing at elevated rates above 30 percent, strong tax revenues will have a limited effect on primary fiscal standing.”

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