December 12, 2013
A Budget Liability
The national government is going through the process of having the 2014 Budget bill approved in Congress. Buenos Aires City, headed by the centre-right Mayor Mauricio Macri, has now unveiled its own budget bill. Both the national and the city government are anxious to see the budgets approved, but by making them public ahead of the midterm elections scheduled for October 27 they risk turning them into campaign issues. Effectively, both budgets have now been sandwiched into the middle of the campaign between the primaries held on August 11 and the upcoming vote. The national government had little choice but to move its budget bill fast because it now clearly risks losing control of Congress if its defeat in August happens again when the time comes to vote this month. Now the BA City budget has also been caught up in the electioneering at a time polls show that Macri’s party, PRO, is heading for victory in the Buenos Aires City senatorial vote but is facing a stiff challenge from UNEN candidate Elisa Carrió in the race for the Lower House of Congress. Perhaps the biggest difference between the national and municipal budgets is the way they deal with the annual inflation rate. While the national government is expecting an annual inflation rate of 10.2 percent (hardly believable) the Macri administration’s budget sees a hike in the cost of living for 2014 in the range of 21 percent.
The news is that Macri’s budget plans to hike the key ABL property tax by 24 percent on average next year. Macri’s technocrats have explained that they have no choice but to hike the property tax because an increase in the salaries of municipal employees is also planned. According to the budget, 55,000 properties in Buenos Aires will see a tax hike of as much as 40 percent. Macri’s argument is that the entire nation knows that it suffers from high inflation and that a budget can’t ignore that fact. But predictably Carrió, ahead of the election that could turn her into a potential presidential candidate once again, has called for a freeze in the ABL property tax.
Polls show that there is widespread support for Macri’s Metrobus (despite the recent questions about overspending in the fast-lane for buses project). But the ABL increase could turn the property tax into a key issue when the time comes for Buenos Aires to vote for a new mayor in 2015.