Thursday, March 30, 2023

Sermons on tax cuts

Charles Stener

The tax break announced by the President in his message to the General Assembly raised comments of all kinds. Although many positions have purely political aspects, which is good in a society with a full democracy, it also serves important events on the table for the future of the nation.

First of all, the government rightly justifies that the cut is an electoral obligation to fulfill, when the citizens validate it with their vote. The prince acts nothing but the unlimited mandate of the citizen for the absolute execution of political expediency. Indeed, in order not to do so, a demagogic act would have been intended for the elections.

Second, it tabled compliance with the fiscal rule recently approved by the LUC. This innovation in public affairs is a real structural reform, which guarantees the maintenance of public affairs and government debt for a time. Its implementation is the usual method of increasing public spending in the pre-electoral period (the voter’s carnival), which was common in our country when we analyze its economic history. Its compliance is also a powerful way to anchor expectations based on inflation. Without a sustainable fiscal policy, no monetary system is capable of lowering inflation on its own. much more so if there is a financial economy like the one existing in our country.

In this sense, the amount of tax reduction announced (<0.2% of GDP) does not seem to jeopardize compliance with the fiscal rule. And if the risk of non-compliance appears, the government has already shown enough evidence in the management of public funds to carry out the necessary improvements.

It is also worth noting the objective of the proposal, which focuses on tax reduction in the lower part of the balance, providing it with a gradual budget, raising the minimum tax rates. Also about tax justice, modifying the deduction criteria, especially for the number of children. Personal income tax is still more like income tax than the usual transfer of other countries. This hides significant horizontal inequalities, discriminating between large families in terms of taxes. The correction is still pending, but the discussion is necessary.

This was done with wavers and tax reductions for SMEs, badly affected by the pandemic and genuine job generators.

Demonstrating, as it is implied, that the lowest segments of the population are not served, he denies that the definition excludes only those who pay taxes. It is to help those parties through direct or indirect transfers that are outside the scope of announcements. If this is the case, the discussion must go elsewhere, because this prevents the discussion about the reasons for the action and the possibility to solve it.

The transfer has to increase the fiscal limits determined by the growth potential of the long-term Gross Product, currently estimated at 2.1%. The decision revolves around how to increase, otherwise we will always revolve around the same treadmill of no statement.

By the way, we need to increase spending on education, support knowledge and innovation to increase global productivity. Real wages are also increasing in the public sector, and our very generous social security model, including an integrated health care system, is almost unique in developing economies. But the ability to increase spending is limited and financing is a huge challenge. So I think it’s time to drop the ball. The political system has recognized for decades that the social security system must be reformed to adapt to the new demographic and structural needs of the system. Debated ad nauseam, the bill touches on many of the ideas and best practices of academia and similar reforms in other parts of the world. There is no complete or definitive reformation. Machines should be repaired in force, but without their approval it will be a historic mistake. and more, where there are no substantial substantive questions.

Education reform is the cry of all parties, as the best way to improve social justice and promote growth. Between the administrations of the last administrations and now, the only difference is that the current one is carried out, against the opposition of the colleges of teachers in the face of the indifference of the opposition that knows it. a reform in progress, a correct direction, which can always be accomplished, but which does not want to pay the political costs that its implementation implies.

Finally, in order to grow more, you need to increase the investment forever. Access to markets is a better way to attract foreign direct investment, which in turn brings about technological change. Since the paths may be different, we can not only focus on the search for goods that can bring about large agreements, but on the other hand use the limited agreements already signed by Mercosur. Without stopping this effort, we must continue to look for better access to the conditions associated with sanitary barriers, the types of products that open up significant opportunities in export offers.

These are some of the relevant issues that shape the country’s destiny, for which a political opportunity should arise.

Nation World News Desk
Nation World News Desk
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