Argentina launches extraordinary Tax on Large Fortunes

An extraordinary tax on large fortunes began to govern this Friday in Argentina, the collection of which will be used to support the fight against covid-19, grant subsidies and emergency social aid in a country where poverty exceeds 40%.

The law, approved last December, establishes a one-time “solidarity contribution” that will progressively tax people whose assets exceed 200 million pesos (2.17 million dollars).

The Senate approved it on December 4 by 42 votes in favor and 26 against.

The Federal Tax Administration (AFIP) was enabled as of this Friday to analyze the assets of taxpayers and request the tax according to the tax base established by law.

It is estimated that it will reach about 12,000 citizens in this country of 44 million inhabitants, 40.9% of them below the poverty line.

According to the norm, the tax will apply a progressive rate of up to 3.5% on goods declared in Argentina and up to 5.25% on those that are outside the country.

Extraordinary collection will be applied for specific purposes, according to the law.

20% will be allocated to medical supplies for the pandemic, another 20% to small and medium-sized enterprises (SMEs), 15% to social developments, 20% to student scholarships and 25% to natural gas enterprises for those who are not connected to network.

It is estimated that the law will raise an additional $ 3 billion this year.

The tax falls on individuals and not on companies.

It still remains to know the terms and forms of taxation, which will be detailed in AFIP resolutions next week.

The law allows taxpayers to repatriate assets in order to reduce the tax rate.

The Argentine economy has been in recession since 2018 and has unemployment of 11.7%. Between January and November 2020, the GDP accumulated a fall of 10.6%, according to official data.

-Inequalities –

The debate on the contribution of great fortunes in the midst of the global crisis due to the pandemic transcends Argentina.

The Latin American Network for Economic and Social Justice (Latindadd), made up of organizations from 13 countries, proposes to apply a similar tax that they calculate would allow them to collect about 26,000 million dollars, enough to guarantee the distribution of the vaccine against covid-19, he says .

The NGO Oxfam also renewed its call to create taxes on wealth to combat “the virus of inequalities.”

In its latest annual report, Oxfam noted that “in just nine months, the world’s 1,000 largest fortunes had already recovered the economic losses caused by the pandemic.”

While the poorest “would need more than a decade to recover from the economic impacts of the crisis.”