AFIP director Echegaray goes into income tax details

Even though President Cristina Fernández de Kirchner had stolen his thunder by announcing the previous evening that the income tax floor would be raised 20 percent, AFIP tax bureau chief Ricardo Echegaray gave a follow-up press conference yesterday to give further details, including a parallel increase in wage and pension tax deductions.

Thus the sum which could be deducted for a spouse will rise from 14,400 to 17,280 pesos, for a child from 7,200 to 8,640 pesos and “other charges” from 5,400 to 6,480 pesos. Meanwhile, the overall special deduction for salaries and pensions will rise from 62,208 to 74,650 pesos and from 12,960 to 15,552 pesos in the case of the self-employed.

Holding the press conference jointly with ANSeS social security administration chief Diego Bossio, Echegaray explained that the executive branch was only empowered to define tax floors with all other aspects up to Congress on “no taxation without representation” principles.

He also pointed out that the new floor would take the number of workers paying income tax down from 2.4 to 1.6 million with 7.7 million tax-free (82.5 percent of the workforce) although he evaded a question as to what these totals might be if the ongoing collective wage bargaining awarded increases of 20 percent or more.

“That’s the photo for now ... the time to analyze the impact will come later,” he replied, claiming that many pay increases will only start to bite in the third quarter of the year.

Of the 17.48 percent paying income tax, 10.48 percent would pay less than 500 pesos a month and only 0.5 percent the top bracket of 31-35 percent, he said.

Echegaray further informed the press conference that there would be no immediate change in the sector of the self-employed — a sector rife with fraud and with most people not in the right bracket with “stunted” revenues unrelated to their wealth of assets and levels of consumption, he claimed.

Herald with DyN, Telam