The ten most distorting taxes that “boycott” competitiveness
In 2024, 154 taxes were recorded: 45 national (without the Country Tax), 25 provincial and 84 municipal . However, only 10 represented 92% of the revenue , according to the “Tax Vademecum 2024” of the Argentine Institute of Fiscal Analysis (Iaraf) .
This was stated on Tuesday at an event organized to present the merger of the Lisicki-Litvin studio with Abelovich, which makes it the sixth largest in the country.
César Litvin , CEO and partner of Lisicki, Litvin y Asociados , considered that “ competitiveness must be improved and the tax system simplified , with one that encourages investment, employment and production, instead of generating obstacles and distortions.”
He said that "it is necessary to analyze the taxes that apply at the national, provincial and municipal levels , and identify the most distorting ones that boycott competitiveness ." He listed them:
- VAT: 26.6%
- Contributions and contributions to social security : 17%
- Income Tax : 16%
- Gross Income Tax : 14.7%
- Tax on credits and debits in bank accounts : 5.7%
- Export duties : 2.8%
- Country Tax : 2.8%
- Import duties : 2.5%
- Health and Safety Inspection Fee : 2.4%
- Internal taxes shared : 1.9%
" There are overlapping taxes that are passed on to the consumer , in the sense that on the same taxable base and tax capacity, for example, at the national level VAT and in some cases the internal tax, at the provincial level Gross Income, and at the municipal level the Safety and Hygiene Tax (TSH)," Litvin stressed.
At the same time, he pointed out that of those 10 taxes, four represent 7.4% of GDP: Gross Income (4.10%), Tax on credits and debits in bank accounts (1.65%), Export duties (1.05%), and TSH (0.60%).
He also raised the problems that arise from the withholdings that are applied before the tax obligation is generated ; the tax pressure on the formal sector of the economy , which amounts to more than 50% of the GDP; and the total tax rate for companies , which reaches 106.31% of commercial profits.
On this last point, Litvin indicated that this percentage places Argentina in second place in the world in terms of tax pressure on the formal sector of the economy, only behind the Island of Comoros.
“ Other countries have lower tax burdens . For example, Venezuela with 73.3%; the United States with 36.60%; Latin America with 46.63%; and the European Union with 40.02%,” he explained.
To mitigate this situation , Litvin proposed:
- Replace Gross Income Tax with a tax that taxes only retail sales.
- Eliminate export duties .
- Eliminate the tax on credits and debits in bank accounts.
- Modify the Income Tax with accelerated amortization for investments, special deductions for incremental exports and an updated calculation of losses without a time limit.
- Establish the free availability of technical credit balances in VAT .
- Determination of municipal rates based on the cost of the service actually provided to the taxpayer.
- Withholdings and payments on account with the taxable event prior to the payment on account.
- In Defense of Taxpayers, eliminate the “pre-payment” to discuss the origin of the tax and generalize the suspensive effect of the appeal, so that the taxpayer exercises his right of defense without the tax authorities executing the “supposed debt” or placing embargoes.
- Eliminate Stamp Duty , since it is “medieval”.
- Eliminate low-revenue taxes .
Clarin
