Villarruel breaks tie in Argentina’s Senate to approve Milei’s flagship Ley Bases

[antipodean]

You keep referring to Norway as if that is some sort of model that Argentina could even dream of replicating.

Norway has a population of about 5.5 million people, AAA sovereign credit rating, and a culture/society/work ethic that is total different than Argentina.

Argentina has a population of about 48 million, a CCC sovereign credit rating (extreme junk/ shutout of markets), and history of screwing investors.

Statoil controls about 60% of all North Sea oil production and at its peak was about 80% owned by the Norwegian state. Those 78% tax rates you keep referring to are not what you think they are. Statoil is corruption free, run as a true business and as essentially an arm of a AAA rated sovereign, able to borrow money at AAA sovereign (low) interest rates.

YPF has been a total disaster for most of its existence and has the same credit rating as the sovereign and thus can only borrow money at exorbitant rates.

My point is that no money is going to come into Argentina to turn the economy around unless terms are offered to investors that incentivize them to play ball and take the tremendous risk getting involved with Argentina entails. Argentina cannot get out of this quagmire being lead by the state because the state has absolutely no credibility whatsoever among market participants, foreign and domestic.

Foreign idealists often cite Nordic models (many without ever having set foot there let alone lived there for any meaningful amount of time) to back up their policial beliefs as if it were some kind of silver bullet on a smorgasbord of simple policies you can pick and choose. Yet they always, without fail, have a superficial understanding of the model and glaze over the realities of Nordic countries so they cannot (or choose not to) see why the model can’t and won’t work in many other places. They also forget that first and foremost a Nordic model is a user pays model, nothing is given for free and everyone pays - 180 degrees of difference to the current long standing Argentine model.

Alberto Fernández did the same when he said one day he wanted to be like Sweden, another day like Norway, the next day he practically did away with income tax for most taxpayers (oh the irony) and the day after disillusioned voters told to him to go shove his perverted Nordic model fantasies up his a$$ and voted in an extreme figure such as Milei serving up a cold shower of reality…

 

[dilmah]

a Nordic model is a user pays model

the next day he practically did away with income tax for most taxpayers (oh the irony)

but income tax is not about "user pays". Income tax is about making working people pay for everyone (both for wealthy parasites and for welfare parasites).
While real beneficiaries of capitalist system (holders of wealth) do various accounting tricks to show as little income as possible and pay as little as possible (compared to their wealth).

 

[antipodean]

but income tax is not about "user pays". Income tax is about making working people pay for everyone (both for wealthy parasites and for welfare parasites).
While real beneficiaries of capitalist system (holders of wealth) do various accounting tricks to show as little income as possible and pay as little as possible (compared to their wealth).

I would argue that a Nordic model it is very much user pays and is different from a UK or US style model as you describe - everyone pays and everyone has guaranteed and equal access to all state social welfare services from birth until death without things like means-testing or incentives/ requirements to use parallel privatised/ co-op or out-of-pocket services. Taxes are based on the cost of services taxpayers consume from the state as the service provider which is why they are far higher than the OECD average. Taxes are primarily a local affair and as are the administration of state services - in order to give taxpayers transparency that their taxes are coming back to them directly in their own communities. In the US for example one could pay 40%ish in total taxes on their income, whatever it may be, and rich or poor still need to pay extra for health care, child care, retirement and education etc making the 50%ish taxes in Nordic countries look like a Club-Med all inclusive package.

This model however needs low income inequality to actually work and continue to be politically viable, as Norway currently enjoys and as Sweden is finding out the hard way... something that Argentina is so far away from that it is not even worth trying to imagine.

(BTW Nordic countries are actually rather good for the wealthy in terms of staying rich as once income has been made and taxed, there are no/ few secondary taxes on wealth such as high property tax, wealth taxes or inheritance taxes... the problem the high income taxes and fewer loop-holes create however is getting rich).

 

[Ries]

I am looking globally at the percentage of government income in various tax categories.
The Nordic countries all have higher percentages of their income in personal income taxes, and in corporate taxes.
As does the USA, as does Japan, for example.
I am sure if you looked globally, you could find others with similar tax balances.
argentina, on the other hand, has double the VAT/sales tax as Japan or the USA, similar workers social insurance percentages as pretty much all of the above, and then has the wacky export tax.
Virtually nobody taxes exports- Argentina, the Ivory Coast, Russian and Khazakstan are some of the very few.
This is because the powers that be refuse to tax the rich here.

Currently 90,000 argentines are eligible for income taxes. Less than 1/3 of one percent of the population. No info I can find about how many actually pay it. But there is now way that 90k people are making any significant contribution with their income taxes, versus, say, the 52% of US government revenue that currently comes from income taxes.
It doesnt matter if, online, Argentina has a page describing income tax brackets.
The simple truth is the system, as currently set up, in not getting any revenue from income taxes, unlike nordic, european, asian, north american, or, pretty much any other industrialized nation.

Obviously, this just didnt magically happen. Lobbyists lobbied for it, politicians voted for it (including Milei before he was elected president) and equally obviously, it shifts the burden to the VAT (regressive and mostly paid by the working class) and the export tax.

all this theory about spending and taxing in every country being different- yup, its true- every other country has income taxes, paid by people with income (the upper middle class and the wealthy) Argentina does not, and its corporate tax slice of the pie is also very low, because the laws are written to make it that way.

 

[antipodean]

Mini RIGI: el Gobierno convocará a empresarios para consensuar el proyecto de una nueva ley pyme

Distintas cámaras, como la UIA o CAME, tienen sus propias propuestas. Pero el objetivo es que el proyecto apunte a todas las pequeñas y medianas empresas, no sólo a las industriales. Esperan la sanción de la ley Bases para avanzar

www.infobae.com

After the RIGI was approved, now they are working on a similar law change proposal for small and medium size enterprises.

(And Ries, if a pie chart is missing part of the pie then the “weight” of VAT, which is a relatively easy one to collect, vs corporate and other income taxes collected is going to distort your vision. Argentina has between 35% and 100% of its annual GDP flying under the radar - it’s called the informal sector (and for many businesses it’s called “survival”) and it doesn’t pay tax let alone social contributions - but let me tell you as a business owner who pays all business taxes the real tax burden for businesses in Argentina is astronomical for those who actually follow the rules and pay more than their part - a systemic problem that this government with the Ley de Bases is trying to address for once and despite its libertarian ideals, it’s tax policy that it is aiming for with these law changes is boring old OECD copy and paste that isn’t some ideological whim or vote buying de siempre through shifting the tax burden to “someone else”)

 

[Murray Rothbard]

Australia and Canada are also two other countries that have based their economic model on exporting raw commodities. It is about 15% of Australian GDP and 20% of Canadian GDP. This also helps to prop up the value of their respective currencies. It's not really difficult for a country and its people to get rich once foreign investment and mining is allowed. Unfortunately, it seems like people in Argentina enjoy being poor.

Note that both Australia and Canada have cleaner air and water than Argentina. So there are minimal environmental impacts if properly managed.

 

[Ries]

Australia and Canada are also two other countries that have based their economic model on exporting raw commodities. It is about 15% of Australian GDP and 20% of Canadian GDP. This also helps to prop up the value of their respective currencies. It's not really difficult for a country and its people to get rich once foreign investment and mining is allowed. Unfortunately, it seems like people in Argentina enjoy being poor.

Note that both Australia and Canada have cleaner air and water than Argentina. So there are minimal environmental impacts if properly managed.

obviously "managed" is the critical word here. Argentina can choose to manage, or choose to give away the store.