This Monday the Government confirmed the elimination of the PAIS Tax, a measure that had already been anticipated as part of the plan to lift the “dollar stocks.” Milei seeks to free the circulation of currencies in order to benefit the most concentrated capital linked to the primarized economy and following the mandates of the International Monetary Fund (IMF), in the midst of negotiations for a new loan. The measure could further hit sectors of the industry that have been falling and transferring their crisis to workers through tens of thousands of layoffs.
This decision implies a significant change in the tax regime applied to operations in dollars. Until now, the PAIS Tax established a surcharge of 7.5% on the official exchange rate for imports and 30% for credit card operations in foreign currency. Although the 30% collection of Profits and Personal Assets for card expenses in dollars remained in force.
By encouraging imports and reducing tax revenues, the Government’s decision increases pressure on the exchange gap and budget adjustment. Milei is betting that the growth of exports of both raw materials and industrialized products with low added value will compensate for the losses. If this objective is achieved, it would be a step forward to deepen the primaryization of the country, increasing its dependence on foreign capital and destroying registered jobs with salaries higher than the average.
This trend is already being expressed in this year’s statistics. The National Institute of Statistics and Censuses (INDEC) in its report on the progress of the level of activity for the third quarter of 2024 reported that the level of activity is still 2.1% below the same quarter of 2023. Although the Activity shows an improvement compared to the second quarter, activity is well below 2023 (which was also a year of decline, -1.6%), and among the most influential losses is the manufacturing industry; which accumulates a drop of 5.9%. At the other extreme, Agriculture (+13.2%) and Mining and Quarrying (+6.6%) rose.
The Argentine Industrial Union (UIA), the main representative of the large industrial employers’ associations, has not expressed an explicit rejection of this measure. Instead, he has focused his speech on the need to move towards a labor and tax reform that, they argue, improves the “competitiveness” of companies. These proposals include making working conditions more flexible and reducing taxes that affect business profits. The background of these demands is clear: seeking higher profit margins at the expense of the rights and living conditions of workers.
The UIA endorses the Government’s general scheme that involves an exchange rate appreciation (cheap dollar), the payment of the fraudulent external debt and fiscal adjustment. The dispute with the Government is not about a very different economic model, they only seek to preserve their own interests. There are even differences between industrialists, since sectors linked to energy or banks are making extraordinary profits and show greater alignment with the Government.
There is no sector of business that seeks a reconversion of the country’s productive structure, a fundamental step to overcome backwardness and independence. Only a Government of the working class, won with the revolutionary mobilization of the working class and the poor people, can reorganize society and allow superior economic development through democratic planning of the economy. This democratic planning, carried out by the working class itself in each company, could guarantee a comprehensive plan that, at the same time, allowing development, guarantees increasingly better living conditions for all working people.
Source: www.laizquierdadiario.com
