How much collection will lose the government with GDP due to the retentions

The recent announcement of the Government On the temporal reduction of agricultural exports withholdings, it has generated a stir in the country’s economic and political field. This measure, which will be implemented by a decree, will have a significant fiscal cost, equivalent to 0.13% of the internal gross product (GDP), which represents approximately 800 million dollars.

The decision of Government to reduce retentions occurs in a context of pressure by the agricultural sector, which has faced economic difficulties due to drought and fall in international prices. The Minister of Economy, Luis Caputo, has been in charge of formalizing the details of the decree that establishes the reduction of export rights to agricultural products.

How much collection will lose the government with GDP due to the retentions

This measure has been a recurring claim of the agricultural link table, which considers that the withholdings negatively affect the international competitiveness of Argentine products. However, the reduction of withholdings also implies a loss of collection for the State, which has led to Government to press the provinces and municipalities to adjust their own taxes.

The fiscal impact of withholding is significant, since it represents almost half of the financial surplus achieved by the national state in 20242. According to Caputo, the total elimination of export rights would require an surplus of 8,000 million dollars, a figure still unattainable for the current government.

How much collection will lose the government with GDP due to the retentions

Despite the loss of collection, the Minister of Economy has stressed that the measure will improve the collection of co -participible taxes, which will generate greater automatic transfers to the provinces.

The reduction of retentions comes at a critical moment for the agricultural sector, which has faced high costs in dollars and an international unfair competition. The rural leadership had demanded an immediate decline of the withholdings, and although they consider this initial step, they consider it insufficient.

How much collection will lose the government with GDP due to the retentions

Competitiveness

Caputo has recognized the difficulties of the sector, but has emphasized that any additional claim should be oriented towards the provinces and municipalities, highlighting the importance of reducing distortive taxes to improve the competitiveness of agriculture.

The announcement of Government From the reduction of retentions it also occurs in the midst of a technical negotiation with the International Monetary Fund (IMF), which usually pressures for changes in the exchange scheme as part of the discussion towards new disbursements. Although there were no official announcements about modifications in the Blend dollar, a measure that is usually objected by the agency’s staff, the Minister of Economy has assured that the economic program will continue to be the one proposed by Argentina.

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