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Propuestas para mejorar el Federalismo Fiscal en Argentina: Un nuevo esquema para la distribución del Impuesto a las Ganancias

Bertello, Nicolas and Uña, Gerardo (2009): Propuestas para mejorar el Federalismo Fiscal en Argentina: Un nuevo esquema para la distribución del Impuesto a las Ganancias. Published in: Fundación Siena Website No. Publicación No. 8 (2009): 01-36.

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Abstract

To promote and contribute to the discussion of fiscal federalism in Argentina, this paper presents a proposal to amend the distribution of the revenue from the Income Tax between the Nation and the provinces.

The proposal is based on the need to help reinvigorate the discussion on the distribution of federal resources. In recent years we have added new elements to the dynamics of fiscal federalism that in some cases reinforce problems that already exist and in some others, modify active aspects in the last and half decade. The provincial debt refinancing by the Nation after the crisis of 2001 - 2002, the changes in the fundraising composition pro to the National Government or reversion of the pension reform are examples of these changes.

Given the above, this paper takes a bounded approach to the Income Tax federal distribution, in contrast to an integral reform vision of the distribution of federal resources. In practice, this approach has produced few results to push for reform, both in times of acute financial constraints, as in periods of recovery and with governments of different political signs.

Income Tax, and prior to the partnership, we realize transfers to the pension system, the Suburban Fund and the ATN fund administered by the National Government. The terms of this distribution is a clear example of how changes in the economic, political and fiscal problems have deepened in the '90s for the allocation of federal resources and created new others. Virtually all such transfers are no longer justified or become outdated.

First, the reversion of the pension reforms of the nineties, with the elimination of private capitalization system in late 2008 has changed the revenue structure of the pension system, reversing in part the reasons that justified the yield of part of the provinces revenue to finance it. Today, ANSES surplus contrasts with the increasing deterioration of the provincial finances. Moreover, part of the surplus of ANSES is intended to finance the National Government, which in turn provides financial assistance to provinces. This contributes to a scheme that increases the dependence of the provinces of federal transfers and lessens their predictability for policy development. To this situation has also contributed, the change in the tax structure since 2002, with a tax increase with limited partnerships, increasing Nation resources to the detriment of the provinces.

Related to this, there is a fiscal situation deteriorated even more and with greater reliance on National Government funding, in the Province of Buenos Aires. Since the early '90s, recognizing a disadvantage situation in this province in the partnership scheme, it was set up Suburban Fund which was allocated 10% of the revenue from Income Tax. However, it was later established a fixed stop to this fund, which was never updated, now the Suburban Fund harms the Buenos Aires Province, because it would get more resources if the fund had a normal partnership.

Finally, from the Income Tax the 2% goes to Treasury posts fund (ATN), formally created in order that the nation attend the provinces in case of emergency. This instrument is no longer relevant. On the one hand, the ATN fund accumulates resources that are not distributed by an estimated amount of $ 8,500 million. Moreover, today are financial assistance programs and other discretionary transfers the mechanism by which the National Government transfers resources to several provinces.

With this in mind, we present a proposal to amend the federal distribution of Income Tax, adding resources to the provinces in general and a steal on the Province of Buenos Aires in particular. This will reduce transfers to the pension system, it eliminates the amount allocated to ATN and updating the Suburban Fund.

This proposal comes under the parliamentary treatment of the extension of several major taxes, among which include the Income Tax and seeks to contribute to this debate. Additionally, and beyond this situation, the work aims to highlight some aspects that justify the restatement of fiscal federalism in Argentina, adapted to a gradual approach of reform, aligned with current political possibilities.

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