July 31, 2014
Updating the income tax floor is an emergency issue for many people but its consequences are also too important to accommodate their sense of urgency (in a country where the urgent chronically overshadows the important) — this decision is an extremely tough call rather than the mechanical updating of a figure to inflation. If the income tax floor is raised from 15,000 to 19,000 pesos, as some opposition parties demand, it represents an annual sum of 4.5 billion pesos, according to an opposition deputy, PRO’s Federico Sturzenegger. Not to mention those leftist parties and some Broad Front-UNEN leaders who raise the floor to 50,000 pesos, way beyond any developed country’s levels. Major surgery would then be needed on a budget where cuts have long seemed overdue — the April revenue figures showed income tax collection as up 43 percent over the year and much of this gain would be lost with a higher tax floor. On “first in, first out” principles, the recent Progresar scheme to tackle the problem of the million-plus youth who neither work nor study (11,5 billion pesos) might be chopped rather than less deserving items (the likely increase in soccer spending with First Division expansion, for example).
And yet Progresar is an indicator of where the priorities should be lying when addressing working-class needs — one week after May Day, it seems bizarre that in the past year so many Peronist trade unionists should have embraced such a bourgeois concern as tax thresholds as their top demand. Needless to say, the opposition parties with a middle-class electoral base are pushing a higher income tax floor even more enthusiastically than those heavyweight trade unions with the clout to give their members comparable wages (not always synonymous with skilled labour) but leftist deputies would like to see more attention given to areas of greater need such as youth unemployment and that highly vulnerable third of the workforce whose jobs are not formally registered.
The government is thus between a rock and a hard place when it cannot delay raising the income tax floor much longer, given the inflation in the eight months since it was last adjusted, but nor can it inflict harsh cuts on a society already struggling with incipient recession — yet why should the onus only be on the administration? The revenue cuts proposed by the opposition are by no means limited to income tax — thus grain export duties are also a favourite target as well as pegging pensions to 82 percent of the worker wage — but they should spell out the corresponding cuts with hard figures if they aspire to be a serious alternative.