Income Tax, or taxation as it is known in some countries, is a fundamental element of mature tax systems aimed at ensuring solvency and equity through state intervention. Alongside VAT and social security contributions, income tax forms the basis of public financing and promotes fairness in the distribution of the tax burden. However, in Argentina, there has been an ongoing effort to discredit this tax primarily driven by those with greater power seeking to avoid contributing towards public policies.
The issue that Argentina faces is a disproportionate burden on corporate tax compared to personal tax, a trend that is prevalent in many Latin American countries. This regressive system negatively affects distributive equity and impedes investment and employment opportunities. The alignment of corporate entities with the tax burden results in price transfers and loss of employment opportunities.
Over time, the Income Tax in Argentina has faced challenges due to factors such as proliferation of exemptions, low compliance levels, and changes in tax scales. These factors limit its ability to apply effectively across higher income brackets within the population. To address these issues, the IMF has recommended that Argentina redesign its Income Tax system to adhere to international standards and promote sustainable fiscal practices.
A comparative analysis of Income Tax in Argentina reveals a need for the country to focus on increasing collection rates and progressivity of the tax. Recent reforms implemented in countries like Colombia, Chile, Brazil, and Uruguay demonstrate a commitment towards enhancing tax collection and equity. While there is room for improvement in terms of effective collection, progressivity and redistributive impact within Argentina’s existing system.
To achieve fiscal balance and sustainability while protecting vulnerable sectors stimulating economic growth fostering employment requires urgent action from government reforms focused on retirement mobility must be balanced carefully considering pensioners’ impact on broader economy reformation should aim at improving pension situation medium long term fairness while ensuring sustainability within pension system
