María Eugenia Vidal increases real estate by 38% and lowers gross income for some sectors

November 5, 2018 - By Joseph Taylor

The governor of the province of Buenos Aires already has a roadmap for the 2019 public accounts. Now she must wait for her work plan to be approved by the Legislature, basically with the votes of the Frente Renovador, some of the PJ and, of course, all change. The rejection of the FpV is ruled out. The plan of María Eugenia Vidal is adjusted to the context of fiscal balance that the Nation promised to do next year. The Province, for example, must absorb transport and energy subsidies. The municipalities will pay the charge of the social energy tariff.

On the tax side, the Buenos Aires government plans to lower the aliquots of the gross income tax for different sectors. That means a loss of revenue of $ 10,000 million estimated official sources of the government. A quarter of this income that Vidal ‘relegate’, will come from the field pay less for gross income (the rate will go from 1.5% to 0.75%). The reduction in gross income will run, in addition to the agricultural sector, in professional services (from 5% to 4.5%), construction (3% to 2.5%), transportation (3% to 2%), public services (4 % to 3.75%), communications (5% to 4%) and rents (6% to 5%).

Following on the tax side, Vidal will present a proposal in the Legislature to increase the aliquot of the property tax on rural and urban properties by 38%. It is estimated that three of every four Buenos Aires receive monthly increases of $ 63 on their ballots and $ 99 maximum.

Finally, in tax matters, the novelty will be that it will seek to tax the online game with an aliquot of 15% (gross income) and a fee will be paid. In addition, a tax will be introduced to the game with a 2% aliquot to slot machine prizes. Near Vidal estimate that for this last lien will raise $ 6,000 million. The proceeds will be used to finance health, education and social protection expenses.

From the point of view of spending, as in 2018, the government of the Province will seek to lower the level of expenditures that make the functioning of the policy, basically, the Legislature. The same will look for it to happen with the functioning of the provincial state. In fact, the Budget involves increases in salaries and tariffs – the tariff policy that will affect public transport and the energy of Buenos Aires Province will now be transferred to the orbit of the Province – in line with the inflation budgeted at the national level. The average annual inflation of Nicolás Dujovne (National Budget) for the coming year is 34.8%.

From the Province indicated with respect to the Budget project that “the main focus will be on the public works plan, which continues to represent 6% of the budget, and social investment that represents 7 out of 10 pesos of the budget.”

Sources of the Province, pointed out that the fiscal accounts are surplus from the operational point of view (read as the difference between income and payment of wages) for the third consecutive year. However, when the payment of infrastructure works is included, it becomes deficient. In 2019 a red of about $ 40,000 million is projected. The total projected expenses of $ 929,000 million, while total revenues amount to $ 889,000 million.

How does Vidal plan to finance that hole? With debt. The Province plans to take capital from the market for an amount of $ 68,500 million (basically to pay off existing debt) and, on the other hand, issue letters (short-term debt) for $ 8,500 million.

The Budget project does not contemplate the income from the Fondo del Conurbano. “We passed the discussion for 2019,” explained government sources. The extra income in debate – it is sought to determine with the Nation in what term and form the payment would be made – is $ 19,000 million for that concept.

In the Province they explain that next year they will face an extra expense of about $ 28,000 million. This is because they will receive less transfers in the form of subsidies and the Sojerium Fund.

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