The government is pushing for the approval of income tax restoration for high-paid salaried workers as part of the ongoing tax reform in Congress. According to Chief of Staff Guillermo Francos, they are focusing on profits and personal assets, believing that these changes will benefit the provincial accounts due to their co-participatory nature and their impact on issues such as money laundering.
The IARAF report suggests that the change in profits would result in an additional effective tax burden for the economy, estimated at 0.5% of annual GDP, which amounts to approximately $3,100 million today. The distribution of the collected tax revenue is divided, with 60% going to provinces and CABA and the remaining 40% going to the nation. However, not all provinces will receive the same amount.
For instance, provinces like Tierra del Fuego, Catamarca, and Formosa would benefit the most from the distribution of proceeds, receiving additional annual amounts of $115,000, $110,000, and $103,000 respectively. Meanwhile provinces like CABA Buenos Aires and Mendoza would receive lower amounts of $13,600; $21;6ooo; and $35;6ooo respectively. On average provinces would see an extra transfer of $67;5ooo. Provinces like Santiago del Estero and San Juan would receive extra income from co-participation of $67;8ooo and $71;2ooo respectively. It’s crucial for governors to analyze the comprehensive impact of this tax reform while considering factors such as profits personal assets moratoriums externalization of assets before determining its favorability for their province.
