The province where the Government will take more than 100% of the margin of the producers
“If a dry tax is added to the suffocating tax pressure, the result is an undercapitalized producer and an economy in danger, while the national and provincial governments continue to collect”. With those words, the Entre Ríos District of the Argentine Rural Society (SRA) presented a report on the fiscal pressure suffered by producers in the context of severe droughts and fires.
According to the data provided by the entity, in a normal situation the State takes 87% of the net operating margin before taxes of what one hectare of soy generates, but in the event that the producer suffers a 30% drop in production, as has happened to many these days, the State would keep 122% of the net margin before taxes.
If of corn, the State takes 76% of the net operating margin before taxes, while in the face of a drought that affects 40% of the yield, as has also happened in this campaign, the treasury ends up absorbing 710% of the net operating margin in taxes, leading the producer to total bankruptcy for paying taxes on a production that did not exist
As they indicated, this is so because 60% of the total taxes assumed by a hectare of corn are “distortive” taxes, while in the case of soybeans it is 80%.
In this context, Juan Diego Etchevehere, director of the district for the Argentine Rural Society, expressed: “The withholdings and the battery of taxes paid by the activity show that the State always collects even if there is no profitability. For this reason, we demand a genuine tax reform in the face of the emergency that is being experienced, requesting the elimination of distorting taxes in the province of Entre Ríos and at the national level.”.
In total there are 19 taxes that must be paid for both crops in said province, of which nine are national -such as withholdings, profits, rental income or the check tax, among others, and nine provincial taxes -such as real estate rural, gross income, stamps to the purchase and sale contract among others-, in addition to the financial cost incurred by the producer for the VAT refund and payment system.
“The weight and rigidity of the tax system lead the producer to a situation of bankruptcy, in favor of the State that continues to collect”, they claimed. In the 2020-2021 campaign, Entre Ríos producers transferred 441 million dollars to the State for export rights.
To prepare the study, the entity took as a reference the soybean and corn crops carried out in establishments of up to 500 hectares and the taxes that enter the treasury of what is produced per cultivated hectare were quantified.
With this scenario, from the entity they remarked: “We need a new and simpler tax system to be debated, one that avoids duplication of taxable material and eliminates distortionary taxes with the aim of reducing the tax pressure on producers.”