Argentina's July Revenue Declines Sharply

by Robert Lee, Tax-News.com, London

03 August 2001

After three years of a struggling economy, it is perhaps no surprise that the Argentine government has reported that tax revenues for July fell sharply.

Hector Rodriguez, chief of the public income federal administration told local reporters, 'the fall will be heavy' and according to Reuters' sources, tax revenues are estimated to have fallen by almost 9 per cent in July, from the same month last year, to $3.9 billion.

For the year 2000 Argentina's tax collection totalled $49.1 billion but it has been claimed by some government officials and analysts that if the government took steps to eliminate tax evasion it is likely that figure could be doubled.

As Latin America's third largest economy, all eyes are fixed nervously on Argentina as the government struggles to restore investor confidence by attempting to avoid defaulting on its $128 billion debt. It has also been reported that the country's stock market fell by more than 4 per cent this week and there is increasing speculation that the government may devalue the peso which is currently pegged against the US dollar.

The Argentine Congress passed a 'zero-deficit' law earlier this week as part of the government's Austerity Plan which limits government expenditure to match the same amount that it collects in revenues. At a news conference Economy Minister, Domingo Cavallo, described July as 'a very difficult month,' and indicated that pensions and civil servants' salaries could be cut by as much as 20 per cent if it is to meet the zero-deficit law requirements.

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