December 6, 2013
No taxation without representation
If parliamentary representation was historically born with the approval of taxation which still remains its core prerogative, then Wednesday’s session on the new levies on company dividends and unlisted shares to counter the revenue losses from a higher income tax floor would suggest that its institutional maturity still leaves much to be desired. The 139-91 Lower House vote consisted of unquestioning support from government deputies and equally knee-jerk rejection from around 90 percent of the opposition members present regarding the compensation for a higher tax floor which they themselves had so insistently demanded. Apart from an opposition initiative to index-link the income tax floor, everything was painted in black and white with scant consideration for the various grey areas.
These areas include the question of whether the changes in the income tax floor should be subject to a presidential decree in the first place or whether a self-respecting Congress should not be defending its rights here too on the basis of the historic principle of “No taxation without representation.” Nor was there much curiosity as to the details which will be absolutely decisive for defining exactly how much tax relief will emerge from the higher floor. Factors such as how retroactive the new threshold of 15,000 pesos is and the inclusion of bonuses, overtime, etc. in this sum have their importance because they could make a threefold difference to the relief. As for the new taxes, Civic Coalition deputy Alfonso Prat Gay questioned whether they were necessary in the first place since this financial year’s tax haul is overshooting the revenue estimates of the 2013 budget by nearly four times the calculated losses from raising the income tax floor. Technically speaking, he is correct but (as he well knows) the difference between current tax collection figures and the original estimates is largely explained by an inflation not recognized in the official data, not by real revenue gains. This, in turn, raises the question of the chronic habit of deliberately underestimating forecast revenue in the confident hope that inflation will supply several billions needing no accountability — a practice also raising the issue of “no taxation without representation” — but everything was left hanging in the air.
In next month’s midterm elections, it is to be hoped that the people will be electing not so much Kirchnerites or anti-Kirchnerites as their own representatives imbued with a true parliamentary spirit but perhaps this is too much to expect.