Tough Times For Argentine Factories As Consumers Penny-pinch

[antipodean]

you see argentine brands in south america due to mercosur.
but the frictional costs required to export are very high from Argentina.
I know some companies that are successful because they are able to ship by companies like DHL or Correo Argentina, as opposed to going thru the system of export taxes, customs brokers, and ports for shipping by container.
For instance, Darto sells sartenes to chefs in Paris, and sells quite a bit to the USA- 15 dollars flat rate to any country.
I know a couple of Argentine eyeglasses frame manufacturers, whose products, obviously, are small and light- they export directly to consumers all over the world.
But once you get into bulk freight, the legal and customs and tax ramifications of shipping make it common for prices to have to double or triple.
China dominates consumer retail in the USA right now, without "relocating" simply by drop shipping. I just bought a stereo amplifier from a company in Hong Kong, it was at my door within a week.
Obviously, they also defy your "two way street" rule. They have stricter local ownership and investment and tax rules for foreign companies than Argentina.
You are raising ideological economic theories- I am talking about the simple fact that export taxes of 5% to 15% are just the start. Only a very few countries charge export taxes on goods at all, and of them, Argentina is, I believe, second only to the Solomon Islands (!) in how high the export tax is.
This is all tied in with the way the Argentine tax system is designed to privelige inherited wealth, and tax the middle class and poor, but not the rich- export taxes, along with a very high IVA, and taxes on employee salaries, are the vast majority of tax income to the government. No inheritance tax, no real estate tax outside of BA Provincia (and there, its the tiny ABL) corporate and personal income taxes which exist basically in theory only- the system does not encourage exports, or support increases in manufacturing and Value added jobs and income.

The laws could be changed to encourage exports.
The government could invest relatively small amounts in helping market argentine exports- The Turks, for example, have supported a central showroom in the garment district in NYC for small manufacturers, and, as a result, sell a lot in the USA. The Argentine shoe and clothing sectors, along with small machinery, transformers, tools, lighting, furniture, appliances, kitchen equipment, industrial laundry machines, agricultural machines and accessories, are just a few industries that could be very competitive in North America, if they were able to export freely.
We dont need lots of low priced chinese crap- we need to sell the stuff that is already made here.

Yet you still see Argentine brands in Mercosur countries (Argentina included) selling the products their consumers in foreign markets want to buy that are made in China, offering business services rendered from a campus in Uruguay and keeping their sales revenues from Spain in Spain, when they could be selling products designed in Argentina that are also made in Argentina, serviced from Argentina, and ultimately paid in Argentina if Argentina was a "normal" place in which to conduct international business from.

The two way street is a basic understanding that in order make money you also need to spend money. For example, to produce a finished product for export, you generally need components, some which may or may not be cheaper or better to buy abroad and import. To export something you also need to be able pay the costs associated with getting your products to market, which if overseas, ultimately involves sending money to foreign entities. Argentine policy wants to make money but doesn't let you spend money how you need or want to spend it - a decades old catch 0.22.

On the specific point of taxation, I assume you are not a tax payer here and never have been. Argentina is one of the countries with the highest overall tax burdens in the world - about 42% of the amount you pay for each Alfajor goes to the government in taxes before the business owner can even receive a dividend and go on to pay their own personal taxes, let alone pay the costs of producing said Alfajor. An average SME in Argentina needs to pay around 57 different taxes.

On a business level the taxes which need to be paid before a business owner can pay themselves:
- Ingresos Brutos (levied by each province involved, for example if Rapa Nui sells ice-creams to consumers in every province it needs to pay this tax in each of these provinces) It is a tax on a businesses gross income, meaning tax on top of tax with zero relief (around 8%)
- Municipal taxes (wherever a business is physically operating... about 2%)
- Social taxes (around 8%)
- "Impuesto Cheque" - Tax on transactions that business need to pay on each payment transaction they make (about 2%)
- Various excise taxes, if applicable (e.g. 54% tax on price of luxury 0km cars, 70%+ tax on cigarettes etc.)
- Special sales taxes (e.g. on insurance products, cell phone plans, electronic products, fuel, energy etc.)
- Various obligations to contribute to sector specific or provincial funds (e.g. carbon offsetting funds, provincial energy funds etc.)
- IVA (sales tax) in Argentina is comparable to Europe and many developed countries, the amount also depends on the product (10-21%) and is something that usually gets offset against the IVA the business needs to pay to its providers.
- Various import and export taxes and capital controls
- Real estate and vehicle taxes (on commercial premises and assets)
- Stamp duty
- Capital Gains
- Wealth Tax (e.g. tax on all assets of a company, effectively another tax on top of already taxed assets)
- Business tax on profits (e.g. 25-35%)
- Inflation (Meaning effectively 0 tax credits or relief)

On the personal level which the business owner needs to pay in addition to the above:
- Bienes Personales (1-2%ish) means that real-estate is taxed, along with investments, shares, bonds, deposits, cash, cars, bikes, furniture, watches, pension funds...literally everything and anything that makes up someone's personal wealth over a very small amount (US$27.000)
- Ganancias (income tax of 5-35%ish) which apply only high income and wage earners, not the low or lower middle classes on all forms of income (the proposed threshold is around US$1500 per month for employees to pay income tax, currently it is like $4000-$5000....)
- Various luxury and sales taxes depending where and what (e.g. boats, cars, swimming pools, air tickets etc.)
- Capital Gains Tax
- Inflation

You still really think Argentina's tax system doesn't "tax the rich" or those actually creating value and employment in the economy or that it is not part of the problem discouraging Argentine businesses from expanding and going after international markets, and above all, bringing the value made overseas back to Argentina to benefit the Argentine economy?

 

[Ries]

Yet you still see Argentine brands in Mercosur countries (Argentina included) selling the products their consumers in foreign markets want to buy that are made in China, offering business services rendered from a campus in Uruguay and keeping their sales revenues from Spain in Spain, when they could be selling products designed in Argentina that are also made in Argentina, serviced from Argentina, and ultimately paid in Argentina if Argentina was a "normal" place in which to conduct international business from.

The two way street is a basic understanding that in order make money you also need to spend money. For example, to produce a finished product for export, you generally need components, some which may or may not be cheaper or better to buy abroad and import. To export something you also need to be able pay the costs associated with getting your products to market, which if overseas, ultimately involves sending money to foreign entities. Argentine policy wants to make money but doesn't let you spend money how you need or want to spend it - a decades old catch 0.22.

On the specific point of taxation, I assume you are not a tax payer here and never have been. Argentina is one of the countries with the highest overall tax burdens in the world - about 42% of the amount you pay for each Alfajor goes to the government in taxes before the business owner can even receive a dividend and go on to pay their own personal taxes, let alone pay the costs of producing said Alfajor. An average SME in Argentina needs to pay around 57 different taxes.

On a business level the taxes which need to be paid before a business owner can pay themselves:
- Ingresos Brutos (levied by each province involved, for example if Rapa Nui sells ice-creams to consumers in every province it needs to pay this tax in each of these provinces) It is a tax on a businesses gross income, meaning tax on top of tax with zero relief (around 8%)
- Municipal taxes (wherever a business is physically operating... about 2%)
- Social taxes (around 8%)
- "Impuesto Cheque" - Tax on transactions that business need to pay on each payment transaction they make (about 2%)
- Various excise taxes, if applicable (e.g. 54% tax on price of luxury 0km cars, 70%+ tax on cigarettes etc.)
- Special sales taxes (e.g. on insurance products, cell phone plans, electronic products, fuel, energy etc.)
- Various obligations to contribute to sector specific or provincial funds (e.g. carbon offsetting funds, provincial energy funds etc.)
- IVA (sales tax) in Argentina is comparable to Europe and many developed countries, the amount also depends on the product (10-21%) and is something that usually gets offset against the IVA the business needs to pay to its providers.
- Various import and export taxes and capital controls
- Real estate and vehicle taxes (on commercial premises and assets)
- Stamp duty
- Capital Gains
- Wealth Tax (e.g. tax on all assets of a company, effectively another tax on top of already taxed assets)
- Business tax on profits (e.g. 25-35%)
- Inflation (Meaning effectively 0 tax credits or relief)

On the personal level which the business owner needs to pay in addition to the above:
- Bienes Personales (1-2%ish) means that real-estate is taxed, along with investments, shares, bonds, deposits, cash, cars, bikes, furniture, watches, pension funds...literally everything and anything that makes up someone's personal wealth over a very small amount (US$27.000)
- Ganancias (income tax of 5-35%ish) which apply only high income and wage earners, not the low or lower middle classes on all forms of income (the proposed threshold is around US$1500 per month for employees to pay income tax, currently it is like $4000-$5000....)
- Various luxury and sales taxes depending where and what (e.g. boats, cars, swimming pools, air tickets etc.)
- Capital Gains Tax
- Inflation

You still really think Argentina's tax system doesn't "tax the rich" or those actually creating value and employment in the economy or that it is not part of the problem discouraging Argentine businesses from expanding and going after international markets, and above all, bringing the value made overseas back to Argentina to benefit the Argentine economy?

I have been a tax payer of various sorts, in Argentina, since 2007. I have paid Bienes Personales that entire time. It is a very small tax, only in the provincia of Buenos Aires, not anywhere else in the country. Many people are exempt from it.
I also pay ABL, which is a City "tax" which pays for sewage and garbage. Many countries bill directly for this, I pay many times the ABL for my property in the USA, for those services, and, then, in addition, I pay actual property taxes, which, I assure you are far higher than ABL and Bienes combined.
Current number of people, out of 40 million citizens, who pay actual income taxes, in Argentina- 90,000.
Capital Gains tax, as a percentage of Argentine government income, is, again, a much smaller percentage than in most 1st world countries, and most people or companies who actually have capital gains manage not to pay it at all...
Some of the business taxes you list are real. Others are what they call in accounting "nominal" meaning the tax exists on paper, but the number of taxpayers who qualify are very small.
The wealthy pay zero taxes on those 35,000 hectaire estancias. Ever.

The main income of the government is IVA, employee paid taxes for pensions, and export tax on 5 major agricultural products.
Its a lopsided and very regressive tax system, which affects the employee who earns the equivalent of 500 usd a month far more than the millionaires.

Here is a very interesting link to a chart showing the percentages of various taxes in Argentina. https://www.oecd.org/tax/tax-policy/revenue-statistics-latin-america-and-caribbean-argentina.pdf

compare it to the US version, which is 41% personal tax. https://taxfoundation.org/data/all/federal/us-tax-revenue-by-tax-type-2022/
New York City earns 45% of its city budget from property taxes.
Buenos Aires earns zero percent of its city budget from property taxes.

 

[antipodean]

I have been a tax payer of various sorts, in Argentina, since 2007. I have paid Bienes Personales that entire time. It is a very small tax, only in the provincia of Buenos Aires, not anywhere else in the country. Many people are exempt from it.
I also pay ABL, which is a City "tax" which pays for sewage and garbage. Many countries bill directly for this, I pay many times the ABL for my property in the USA, for those services, and, then, in addition, I pay actual property taxes, which, I assure you are far higher than ABL and Bienes combined.
Current number of people, out of 40 million citizens, who pay actual income taxes, in Argentina- 90,000.
Capital Gains tax, as a percentage of Argentine government income, is, again, a much smaller percentage than in most 1st world countries, and most people or companies who actually have capital gains manage not to pay it at all...
Some of the business taxes you list are real. Others are what they call in accounting "nominal" meaning the tax exists on paper, but the number of taxpayers who qualify are very small.
The wealthy pay zero taxes on those 35,000 hectaire estancias. Ever.

The main income of the government is IVA, employee paid taxes for pensions, and export tax on 5 major agricultural products.
Its a lopsided and very regressive tax system, which affects the employee who earns the equivalent of 500 usd a month far more than the millionaires.

Here is a very interesting link to a chart showing the percentages of various taxes in Argentina. https://www.oecd.org/tax/tax-policy/revenue-statistics-latin-america-and-caribbean-argentina.pdf

compare it to the US version, which is 41% personal tax. https://taxfoundation.org/data/all/federal/us-tax-revenue-by-tax-type-2022/
New York City earns 45% of its city budget from property taxes.
Buenos Aires earns zero percent of its city budget from property taxes.
.

¿Qué es el Impuesto sobre los Bienes Personales? - Bienes personales - Ganancias y bienes personales | ARCA

Información general sobre qué es el impuesto.

www.afip.gob.ar

Sorry to burst your bubble of an idealists fiscal paradise, but bienes personales is a Federal tax. Perhaps speak to a different account or try becoming a tax resident, starting an business and paying your fair share if you truly believe the taxes here are nothing crazy.

As to your beef about an estancia paying zero tax, everything coming off that land to sell is taxed - at about 62%, again before much of that money even ends up in the hands of the estancia owner.

Your infatuation with property taxes is strange and US-centric. I come from a country where property practically tax doesn’t exist (it’s the same if you own a $50.000 cabin in the woods or a $50.000.000 waterfront mansion), nor inheritance tax nor capital gains tax, yet in terms of income equality it is one of the most equal societies in the developed world and in terms of total tax bills it is high.

 

[on the brink]

My cousin runs a small family ranch in BA province. Out of four trucks' that he sends to market, he keeps only one - the rest goes in taxes.

 

[on the brink]

As for property taxes in USA, here's what I got in Virginia for my money:
A superb public library system
Good public schools, complete with bus transportation
Adult education classes, including English for foreigners
An effective, well paid, educated police force
Free-access to multiple public parks
Well lit and well maintained streets
Excellent emergency services - fully equipped ambulances arrive within ten minutes of calling, same for Police and firefighters

Here's what I get in San Isidro,
Partially lit streets
Trash collection
Clean streets, in some parts
An ineffective, underpaid, thoroughly corrupt police force
Dangerous streets, requiring private guards paid by the neighbors
Public hospital - underfunded and overcrowded but good

For a comparable home, VA taxes were about twice what they are in Buenos Aires province. But incomes were four times higher.