Angry Argentines Withhold Tax Payments In Protest Against Government

by Robert Lee, Tax-News.com, London

28 February 2002

Argentina has become a nation of tax protesters according to recent reports, which have revealed that the nation's beleaguered citizens have turned to tax evasion in order to register their anger at Government imposed limitations on access to their savings.

'People feel they have a right to evade, lie, hide from a state that stole from them,' Executive Director of Banco San Luis SA, Gabriel Coqueugniot explained to the Bloomberg business news service.

Analysts estimate that tax collection for this month will be down a record 25% from February 2001, as individual taxpayers refuse to pay property and automotive taxes, and Argentinian businesses withhold VAT and income tax payments.

However, instead of attempting to clamp down on the rising tide of tax evasion in the country, the Argentinian Government has come up with a novel solution to its financial problems - print more money. Estimates suggest that the authorities may need to print as much as 1 billion pesos to cover February's bills, but economists have warned that such a move is likely to weaken the stricken currency - which has already lost half its value this year - still further, and accelerate inflation.

Analysts have also warned that the increase in money supply is likely to make it difficult for Argentina to obtain crucial loans from the IMF, which are considered key in efforts to rebuild the shattered economy.

In a country where daily protests outside banks, politician-baiting, and graffiti and vandalism of cash machines have become the norm, however, the Government does not feel that a crackdown on tax evasion is appropriate. 'It makes no sense in the current situation to do the traditional thing of sending inspections to individual businesses or shops,' explained Economy Minister Jorge Remes Lenicov.

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