A relief amid a financial storm

The Government of Tucumán has announced that, for the last month of the year, it plans a millionaire financial investment that will not only allow it to close the year with state salaries up to date, but will also imply an extraordinary financial injection amid the complications that has caused the covid-19 pandemic to all sectors of the economy.

Governor Juan Manzur has calculated the amount of money that will go to the commercial circuit at $ 17,500 million until the festivities of the Magi, on January 6. The measure is expected by merchants as compensation for so many losses accumulated over almost eight months of social, preventive and mandatory isolation. Consumption during this period of confinement has fallen by around 4%, while several businesses had to close their doors due to the acute crisis caused by the pandemic.

Manzur repeats the scheme implemented in the last decade as a way to close the fiscal year without major setbacks. However, the Front and the Union of State Guilds anticipated that they are willing to return to the streets if the Executive Power does not rebuild the purchasing power also hit during the confinement. As in other situations, dialogue must prevail to maintain social peace in a province convulsed by various events that have occurred in recent times. Going back to the streets implies a risk of contagion of a virus that does not yet have a vaccine to prevent it.

Last October, inflation accelerated again (to 3.8%, according to the measurement of the National Institute of Statistics and Censuses -Indec) and this phenomenon worries a society that fears that prices will continue to increase, even more so by a period in which seasonal adjustments are common. In this sense, the State should contribute with compensations that imply sustaining the purchasing power of wages and that these do not continue to depreciate. An important part of the price is taken by the high tax burden that is applied throughout the commercial chain and that, ultimately, ends up hitting the final consumer.

Argentina deserves a review of its tax scheme which, in many cases, implies a loss of competitiveness for products, particularly from regional economies. The State continues to create tributes and hunt inside the zoo, using tax terms, because informality already exceeds the average 40% of the economy. In other words, the tax backpack is heavier for the most visible sectors, which in good times contribute to the day and which, in bad periods such as the health, economic and financial storm that we are going through, needs the support of a State that finances the largest public spending with more contributions from the private sector. Tax reform is a pending matter.

According to the projections of different public and private organizations, the Gross Domestic Product (GDP) may fall by more than 12% annually, a percentage higher than the debacle of late 2001 and mid-2002. Argentina needs an analysis serious of those measures to be adopted for the post-pandemic. For this to be possible, leaders and the main business, industrial, union and political leaders of the country need to sit around the same table and draw the general guidelines for the economic future. That should be the priority in an election year, like 2021.


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