The Chamber of Deputies in Argentina recently approved a “Solidarity and Extraordinary Contribution” wealth tax on assets in excess of USD 2.5 million, passing the bill on to the Senate. A rapid approval of the bill is expected, possibly as early as Thursday 3rd December, as the government has the required votes in the Senate.
Supporters of the bill say it is necessary to strengthen the public accounts and the health system in light of the pandemic. Critics call the tax ‘confiscatory’ and believe it will hinder business investment and economic growth.
The proposed tax would affect about 12,000 Argentinians and is projected to raise USD 3.8 billion for the national coffers. A local high-net-worth individual does not believe this is possible, “Having assets does not mean you have the liquidity to pay the contribution. It is a pity, because at the start of the pandemic wealthy business people were offering voluntary contributions of some USD 100 million. This cash could have been deployed immediately to help fight the virus. Unfortunately, the government jumped on this idea, calling for a mandatory wealth tax, but by the time this is implemented and paid, the pandemic will be over.”
“Unfortunately, the government jumped on this idea, calling for a mandatory wealth tax, but by the time this is implemented and paid the pandemic will be over.”
High-net-worth individual, Argentina
The President of a leading business association warns, “The problem is that it is not understood what wealth is. Wealth creates employment, increases production, increases exports, etc. How is this going to be achieved if the only thing that grows in Argentina is the size of the state?”
An opposition Senator agrees, “It is not by inventing a new tax every day that you will create wealth, we are just shrinking our economy. The government is desperate, they do not care about solidarity, they just want to maintain their state apparatus.”
“It is not by inventing a new tax every day that you will create wealth, we are just shrinking our economy.”
Opposition senator, Argentina
Local politicians are also angry, “The government has ensured this tax is not ‘co-participable’, meaning it cannot be shared with the provinces. The provinces also have big fiscal problems.”
Other business executives are suspicious, “We all know what will happen in Argentina, the tax will go to some specific government fund with a far-fetched name that will end up paying political expenses. They say it is a temporary measure but everything that is transitory in Argentina ends up being forever.”