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Budget: Government plans to continue with chainsaw in 2025 - Ambito Financiero
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Presupuesto: el Gobierno planea seguir con la motosierra en 2025
El año próximo se termina el Impuesto PAIS que explica el 6% de la recaudación y subirá el gasto de los intereses de letras del Tesoro. En Economía dice que seguirán con el recorte.
www.ambito.com
September 05, 2024
By Carlos Lamiral
Next year the PAIS tax, which accounts for 6% of the revenue, will end and the cost of interest on Treasury bills will increase. The Ministry of Economy says that the cuts will continue.
On September 15, President Javier Milei announced that he will go to Congress to explain the 2025 Budget.
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The spending cuts will not end even if the Government achieves a balanced state account this year . This is because the economic team is predicting a loss of resources for 2025 due to the elimination and reduction of taxes.
This was anticipated by the Secretary of Finance, Pablo Quirno, in a talk he gave to insurance entrepreneurs at a meeting this week.
"We are not satisfied with this financial surplus . We are going to work to have a financial surplus with reduced expenses, because that will allow me to maintain the financial surplus with lower taxes ," explained the official who serves as virtual number two at the Treasury.
In this regard, on September 15, President Javier Milei announced that he will go to Congress to explain the 2025 Budget, which will include the elimination of the PAIS Tax, which represents 6% of total revenue. It is the fifth most important tax in the current tax structure.
“We are not satisfied with this financial surplus. We are going to work to have a financial surplus with reduced spending, because that will allow me to maintain the financial surplus with lower taxes,” Quirno explained.
Income falls and interest rises
According to data from the Federal Public Revenue Administration (AFIP), the tax charged on the sale of dollars has contributed almost $5 billion between January and August.On the other hand, it must be taken into account that among the expenses that will increase next year are those corresponding to the debt of the Capitalization Letters (Lecaps) and the Fiscal Liquidity Letters (LeFi ). It is estimated that the Lecaps alone will add another $4 billion in interest expenses.
In the budget preview for legislators sent on July 4, the economic team estimates that Value Added Tax (VAT) revenue will grow by 62.5% compared to 2024.
" The increase in this tax will be driven mainly by the increase in consumption in nominal terms and the greater banking penetration of the economy," says the official message to the deputies.
He also argues that "in terms of GDP, net VAT refunds will increase by 0.23 points compared to 2024. "
As for Earnings, revenues would rise by 47%. If the IMF's inflation estimates are met, then this tax will have practically no growth. In fact, the government acknowledges that it will register "a decrease in terms of GDP of 0.28 points ."
Over adjustment
The fiscal adjustment for the first seven months of the year was equivalent, in annual terms, to 5.3 percentage points of GDP, that is, 0.9 percentage points above the 4.4 points needed to eliminate the fiscal deficit. The data is from the Argentine Institute for Fiscal Analysis.In the first seven months of the year, total effective revenues fell by 5% in real terms and primary expenditure paid fell by 31% in real terms. Meanwhile, debt interest expenditure fell by 4% in real terms.
The equivalent annual improvement in the primary result is 5.3 percentage points of GDP, which would mean going from a primary deficit of 2.7% to a surplus of 2.6% in 2024.
