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Dancing with taxes on the deck of the Titanic

November 4, 2018 - By Joseph Taylor

Taxes, throughout history, have been the cause of revolutions and rebellions to a greater extent than ideologies. To cite the most emblematic examples, it is worth recalling the tea tax in the causes of the independence of the United States or the tax on bread, one of the important triggers of the French Revolution.

Applying taxes, without studying the social and economic context, can generate effects contrary to those expected. Whenever there is a fiscal problem, inevitably the parliament will increase some tax and if possible with some ideological varnish: it is necessary to “tax the rich, discourage vices or take care of the environment”.

In practice there is always a limit to which the taxpayer is willing to pay, beyond what he considers reasonable, assumes the risk of disobedience that generally appears in the form of evasion, either because it can not be paid or pure fanned Creole.

Our country has a huge and chronic evasion, which has not lowered or hardened laws, not even with criminal law, where evasion is condemned with jail. The recent money laundering that was presented as the most successful in history showed the amount of evasion.

Today the economy is in recession, the real collection falls, and the Government aspires to zero deficit; As spending is very rigid downwards, it is proposed to increase taxes in the middle of the budget debate.

Nothing guarantees that the new taxes will be collected, but if it were spent on account of that greater hypothetical collection and the imaginary zero deficit – which resembles the rainbow -, however much we walk we can never reach it.

Internal taxes, tobacco, alcohol or fuel, with high rates and without tax agreement with neighboring countries, is the feast of smugglers, who arrive at the height of exporting without taxes to neighboring countries and then smuggling Argentine products.

High rates of value added tax increase the temptation of black sales, especially at the retail stage; Similar phenomenon occurs with black employment, when taxes on work are very high.

Even high-volume, easy-to-collect taxes such as fuel taxes have been subject to criminal maneuvers when using the tax to finance private businesses.

The design of a rational tax system, which ensures collection and allows productive development, supposes few taxes on a general and sustainable basis over time. This requires a deep and participatory debate, without the urgencies of budget approval.

We can not ask that all legislators be specialists in taxation, but at least that taxes are no longer applied with slogans derived from ideological prejudices.

The only tax that can not be evaded, but is the most inequitable, is inflation. For decades it has been the most used resource and the one that has generated the poorest.

As we are incurable and we come back to colliding with the same stone, a generation destroys the currency and the one that follows the credit; When nobody trusts us, we knock on the doors of the IMF, whose recipes always aggravate the situation, more taxes, more tariffs, more inflation, poorer ones.

Madness is always doing the same things and expecting different results. Why are the consequences of Dujovne’s board going to be different from those of Martínez de Hoz?

The great financial players have assured profits that are not registered in other parts of the planet, but as there is no growth, their profits are the loss of others, in general those who have fixed income, salaried, retired, pensioners and those who receive welfare plans .

Surely someone will say that in the emergency you have to make emergency decisions and the taxes that will be increased or created will last a short time, a fact that belies our history: emergency taxes go through the centuries.

The reasonable, and also provided by the law of financial administration, is to separate the treatment of taxes from the budget law and measure in an open debate the impact on the real economy.

From so much patch, our system has become an unsustainable disaster; for those who want to comply, it is the road to ruin, and a very profitable business for the militant evaders, and with insufficient collection to face the expense of the State.

A first serious agreement, of governability, should go on to define a tributary system that puts axis in the growth of the economy, and finish with old and reiterated ways that lead inevitably to the failure. And it should not be a disgrace for Congress to hear the opinions of scholars on the subject.

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