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Even if it seems very simple, we either increase revenue or cut expenses.
Many of us are talking with concern about the tax burden that is coming for 2019. Concern is not about the financial risk of companies but about being aware that this does not solve the problem.
The problem lies in the current account fiscal deficit of the State. In other words, what you enter every month is not enough to cover the expenses of the same month. And as you can imagine, this problem repeats itself every 30 days, 12 times a year, for good presidential terms.
This government, in its economic sincerity, decides not to borrow in the long term to pay the debts of each month (logical, given that not only would interest be very expensive, but also a short sheet solution). But in contrast to that sincerity, it does not make the adjustment it needs to reverse the situation, which, without political demagogy, we are talking about removing subsidies, dismissals of state employees, curbing free events and limiting the subsidy of the deficit of state-owned enterprises.
Looking ahead to 2020 Macri has two options to mask this crisis: the menemist strategy of borrowing in the long term (yes, more than it already did, because the rich world needs to finance the emerging in a crisis of globalization that is much more complete than ours), or one more to nationalize the income of private companies. In the first one we would be selling the country and in the second one merging it, but in both the consequence would be a good electoral forecast, which is what every politician seeks.
Don't worry, there are alternatives with happy endings. The tax increase is the one that sounds best to this government. Those who are already on the AFIP and ARBA radar will have no choice but to pay, and in a troubled Latin America it is not like in Europe that companies set up camp and move to the east with cheap labor.
A less demagogic and less practical alternative would be to go through 40% of the unregistered economy to increase the tax base and no longer pay the expense of a few.
And yes, even if it seems very simple, we either increase revenue or cut expenses, but for one side and the other there are limits.
Macri can spend another year with high tax pressure, even two more, but eventually this will not resist and we will fall into a new crisis. And back to lag for not thinking about the long run.
Publication Date: 05/02/2019
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