Tax collection in Argentina grew 79.9% in May

RIO DE JANEIRO, BRAZIL – Tax collection in May grew 79.9% compared to the same month of last year, mainly driven by income tax receipts, which grew 102.6% year-on-year, and social security taxes, which increased 75.8% in the same period. This increase implied a real growth of 12% in May.

According to the Ministry of Economy, revenues collected in May amounted to ARS 1,551,370 million (US$12.9 billion). “With the level of revenues reached in May, an inter-annual expansion in real terms is estimated for the twenty-first consecutive month”, remarked the Ministry of Economy headed by Martín Guzmán.

For Gabriel Caamaño, an economist at Consultora Ledesma, this monthly collection is explained by Income Tax and Social Security.

“In the first case, due to inflation and the non-updating of deductions, which will be in force as from June, but which was not applied in May, resulted in higher withholdings. In the second case, many companies last year did not pay part of their contributions, and many workers did not pay part of their contributions because they collected Repro. In conclusion, now that that has changed, the two items have gone up,” he explained.

Nadin Argañaraz, director of the Argentine Institute of Fiscal Analysis (Iaraf), remarked that the collection reached the highest level of the last seven years in the first five months (5.5%).

“The maturity of corporate income tax and the combination of employment with real wages are the factors that explain this reaction. The provinces had a real increase in the co-participation of 16% in real terms,” he pointed out.

Taxes with a higher response to economic activity (+70.1% y.a.) were placed in a second step. Within this group are the VAT (69.0% y.a.), the Tax on Credits and Debits (58.6% y.a.), the Co-participated Internal Taxes (82.5% y.a.), and the tax on Liquid Fuels (51.8% y.a.), all with increases above inflation.

Although it has a lower weight in the total amount collected, the PAIS tax also grew significantly, increasing by 330%. It was due to the low base of comparison since, in May 2021, there were fewer trips abroad and lower expenditures in dollars with credit cards.

Meanwhile, those that continue with a bad performance are export duties, which grew again below inflation with an increase of 42.8%.

“This part is still weak, despite the high international prices, partly due to the impact of the drought and partly because the economic policy scheme used by the Government makes producers retain grains and sell at a lower rate,” commented Caamaño.

With information from La Nación