The new one is already underway “Paid plan”. Improvements in the Income tax the fourth category (employees in a dependent relationship), additionally for older people and “VAT” refund For those buying groceries and essential cleaning products, they are the first example of a package of measures prepared by the government to make us all forget the electoral defeat suffered by the ruling party in the elections on August 13th.
This is not the first “small money plan.” There have been several of them, and the most recent takes us to 2021, in which the similarities with today abound: the electoral defeat in the PASO elections, which then led to endless measures that increased public spending to infinity, including aiming to reverse a defeat in the polls in these PASO midterm elections. The truth is that the similarity of the measures with those we see today did not correspond then with the same situation today: Inflation was just 2.5% in August 2021 and year-on-year inflation was 50.4%. Today, inflation has skyrocketed: the monthly inflation rate was 12.4% in August, and over the past 12 months, inflation has been well over 124%.
The lack of control over public spending that post-election measures will create is difficult to measure: only with the changes to income tax – the non-taxable minimum was raised to $1,770,000 – will the cost of The country’s treasury will increase by at least one trillion pesos (US$1,000,000,000,000) annually. The government has celebrated that only 1% of people will pay profits (in other words, that only 1% of people will earn more than $1,770,000): it must not have realized that celebrating means that only 80,000 People earn more than $2,400 per month (the equivalent of $1,770,000), the salary received today by an employee who has just started at McDonald’s in developed countries. The decay is brutal.
The other measure with a major fiscal impact is undoubtedly this VAT refund on food purchases to “more than 9 million people” (according to the government’s own figures). The monthly refund limit will be 18,800 pesos and although not everyone will have the opportunity to take advantage of the benefit (it only applies to purchases made with a card), the truth is that the blow to the coffers from this decision is up to 10,000 pesos could amount to 676.8 billion pesos by the end of the year.
Every tax cut should be celebrated: it means more money in people’s pockets and therefore more freedom to decide how to spend their own money, without an elephant state deciding for us. The contradictory thing about this “small money plan” is that with annual inflation at 124.4%, the tax cut entails greater money issuance and greater inflationary pressure, since all of these measures were not accompanied by a decline of a similar magnitude. in government spending.
The failure of years of management cannot be solved with short-term, populist electoral measures. Inflation and the destruction of real wages are the result of a losing government choking on its own wrongdoings. To believe that after recent measures they will be able to distort the voting intention of a handful is to fail to understand what is really happening in Argentina today.
The strangest thing of all is that, despite all the evidence, the blame for all the incompetence still seems to lie with the IMF itself. If we continue without recognizing the causes of our decline, we will never be able to imagine a country with a future.