Low Tax Collections In Argentina May Force Spending Cuts

by Robert Lee, Tax-News.com, London

02 October 2001

The Argentinian Economy Ministry has announced that it will reduce spending if the levels of tax revenue collections are not high enough. Chief adviser to Economy Minister Domingo Cavallo, Guillermo Mondino, told the local media: 'Inevitably, if tax collection falls more than forecast the reduction should be more,'

In July Argentina passed a 'zero-deficit' law as part of the government's Austerity Plan which also reduced public sector salaries and various public pensions by up to 13 per cent.

However, analysts are predicting a steady fall for tax revenues in September of between 3.7 per cent and 6 per cent year-on-year which could result in the government cutting back on expenditure.

The government has not yet revealed exact details of the September tax collection. Revenue levels fell dramatically in July when tax revenues were estimated to have fallen by almost 9% from the same month last year, to $3.9 billion.

'Zero deficit is the heart of the (economic) program. And complying with it is what will make us credible ... with respect to new cuts, the Treasury Secretariat is working with various tax collection scenarios. Besides, there are always budget items to cut,' said Finance Secretary Daniel Marx.

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