Lights and shadows of the tax that weighs on people’s assets
In recent times, the tax issue in general and the tax on Personal Assets in particular were at the center of the scene. Once again, on the closing of a fiscal year, the sad practice of introducing changes that increase the tax burden on the patrimony of human persons was repeated, even when trying to “compensate” it with supposed relief measures, which are not more than mere adjustments of monetary variables, essential in the face of inflation. It seems appropriate to provide some details on this type of tax in the world.
●The tax levied on the global wealth of natural (human) persons is currently applied sparingly in other countries.
●In relation to the Organization for Economic Cooperation and Development (OECD), it has been repealed in several countries and now only 4 of its 37 members establish a wealth tax like this: Colombia, Spain, Norway and Switzerland. In 1990 there were 12 countries on the list.
●In Latin America, in addition to Argentina, the tax is in Bolivia (it was introduced very recently as a result of the pandemic), Uruguay, Guyana and Colombia (a member country of the OECD).
●The low participation of this tribute essentially responds to various criticisms it has received. Among the main ones are its low level of collection, its lack of efficiency in terms of administration and compliance, the lack of consideration of the income generated by the goods subject to the tax, the incentive for the mobility of capital and people, especially of high net worth, and low effects in terms of wealth redistribution.
●In the few countries that apply it, the collection it contributes is not relevant. Only in Switzerland does it manage to exceed 1% of GDP and 3% of total collection; in the other cases it does not manage to exceed 0.5% of GDP. The share of the tax that falls on real estate is considerably more significant and, in the case of Switzerland, the greater collection of the tax on global wealth is explained by the fact that few Cantons set the real estate tax.
●In Colombia, the lowest net worth subject to tax is approximately US$1.4 million; in Spain the threshold is US$830,000; in Norway, depending on whether the estate is presented individually or from a family nucleus, the amount is around US$175,000/US$350,000; in Switzerland the floor is US$83,000/US$166,000; in Uruguay, it is US$116,000/US$232,000, and in Bolivia it is taxed from around US$4.3 million.
●On occasions, the application of a global wealth tax has been defended when there are no other taxes that could be its substitutes. Many countries of the European Community have preferred to maintain a free transfer tax.
Regarding our personal property tax, we can say that very few countries today apply a similar tax, that the “floor” from which it is taxed ($6 million) looks significantly low compared to other countries, and that the aliquots look high, reaching levels that force us to examine the claim of confiscation. In addition, it is difficult to find in the comparative legislation discrimination according to the location of the assets (only Italy applies a specific tax on assets abroad).
The tax, which should have been maintained at a rate of 0.25%, suddenly went to 2.25% for assets abroad at the end of 2019 (and now 1.75% for high net worth individuals abroad). country). An eloquent example of the lack of regulatory stability and predictability.
The highest tax collection obtained by this tax (0.75% of GDP in 2020) is not free. The extreme level of rates enhances the adverse effects indicated by the doctrine, such as the disincentive to save, the channeling of investments towards exempt assets or directly towards informality, and the mobility of people and capital.
A convincing fact is the number of residencies processed by Argentines only in Uruguay, which increased eightfold in three years. From 1,482 in 2018 they went to 11,834 in 2021. Any estimate made on the negative economic impact produced by this migratory movement in terms of consumption, investment, etc., will allow corroborating its relevance.
In general terms, the tax on inheritance and donations seems to have been privileged. In our country, according to what is promoted by the 2021 Tax Consensus, both taxes could coexist in a generalized way, once again turning the system into a unique case study.
The author is a public accountant. Partner of Edelstein, Mariscal, Torassa & Asociados; former Secretary of Public Revenue