President Alberto Fernández and Economy Minister Martín Guzmán on Monday announced that they had sent a windfall tax to Congress to tap extraordinary profits arising from the Russian invasion of Ukraine. The levy will impose am extra 15 percent this year on all companies with net profits of, at least, a billion pesos, if they post double-digit profit margins this year or profitability at least 2’0 percent higher than last year. President Fernández argued that countries like Britain, Italy and the United States were debating similar measures to counter inequality and the concentration of wealth with the new tax redistributing extraordinary profits via the state.
Argentina proposes ‘extraordinary income’ tax amid grains windfalls
BUENOS AIRES, June 6 (Reuters) – Argentina’s government proposed a bill Monday to tax companies that earn “extraordinary income” from the war in Ukraine, a measure that would particularly affect the country’s grains industry.
The measure is seen as an attempt by Argentina’s center-left government to reduce the fiscal deficit and help Latin America’s third-largest economy deal with galloping inflation, which is on track to exceed 70% this year. read more
Analysts say sectors like food, energy and agriculture would be most affected, given that Argentina is one of the largest suppliers of grains and meat in the world.
The proposal will have to be approved by Congress, where it will need the support of an opposition that has already voiced its rejection.
The bill is endorsed by the International Monetary Fund (IMF), with whom Argentina recently restructured a $44 billion debt.
“There are sectors that have benefited from the war due to the rise in commodities,” said Economy Minister Martin Guzman when presenting the bill to Congress alongside President Alberto Fernandez.
SOURCE: www.reuters.com
Fernández, Guzmán seek special tax on Ukraine war
windfall profits
President Alberto Fernández vowed Monday to pursue a special tax on company profits boosted by the war in Ukraine, a phenomenon he described as an “immorality” given the inflationary pressure on poor households.
While millions were feeling the pain of rising food prices, the war also “benefits the few… who are gaining a lot,” the Peronist leader, under pressure amid coalition tensions, said in an address.
It is a windfall “that nobody expected to have, because nobody expected a war of these characteristics,” said Fernández.
“This is an immorality, an indecency, which as the State we cannot allow,” he said, repeating his plan for a once-off special tax in 2022 on some companies with taxable profits of more than a billion pesos (some US$8 million) and see an increase of more than 10 percent of normal profits.
Argentina has a poverty rate of about 37 percent, and a projected inflation rate of 60 percent for 2022.
Fernández did not say which sectors would be targeted for the tax, but cited the rise in wheat, sunflower and maize prices in recent months – all products of which Argentina is a major exporter, along with beef.
Attempting to head off opposition criticism, he said the measure was not something plucked out of the air, highlighting similar measures adopted by other governments worldwide.
“It is not something out of the blue, the world has done it and is doing it, Britain is doing it, Italy is doing it,” said Fernández.
The Frente de Todos leader, with Economy Minister Martín Guzmán by his side, urged lawmakers to support the initiative when a bill is presented in coming weeks. The governing party, however, does not have a majority in Congress.
“Congress has the obligation to support the bill, it is an obligation of all deputies and senators, we need a few people not to earn so much at the expense of the majority,” declared the president.
Guzmán has previously stated that the government’s measure would affect only “very large companies in Argentina”.
Last month, the British government announced a temporary windfall tax on oil giants benefiting massively from surging crude prices.
SOURCE: www.batimes.com.ar