BUENOS AIRES | A “solidarity and extraordinary” wealth tax came into force on Friday in Argentina to finance the fight against the effects of COVID-19 with the implementation of emergency social assistance programs.
The law, adopted by the Senate on December 4 (by 42 votes to 26) after validation by the Chamber of Deputies, establishes a single and progressive tax that will be levied on households whose wealth exceeds 200 million pesos (approximately 3 million CAD).
The tax authorities will begin the procedure for identifying taxpayers entering this base, around 12,000 in this country of 44 million inhabitants, 40.9% of whom live below the poverty line.
This “solidarity and extraordinary contribution to mitigate the effects of the pandemic”, defended by the majority supporting center-left president Alberto Fernandez, is supposed to bring in some 2.5 billion euros (around 4 billion CAD).
According to the law, a progressive rate will be applied of up to 3.5% on property declared in Argentina and up to 5.25% on assets abroad.
Some 20% of the proceeds from this tax will go to the health system, 20% will go to aid for small and medium-sized enterprises, 15% to social aid, 20% to scholarships for students, and 25% to indirect aid homes that are not connected to the natural gas network.
This new tax has been strongly criticized by the liberal opposition of former President Mauricio Macri (2015-2019), who considers it to be “confiscatory”.
The powerful Argentinian Rural Society, which represents agricultural producers in a country where the wealth is above all that of large grain farmers and cattle breeders, said they feared that this “extraordinary” tax would become permanent.
Argentina’s economy has been in recession since 2018 and has an unemployment rate of 11.7%. Between January and November 2020, GDP fell by 10.6%, according to official data.
The NGO Oxfam estimated Monday, in its annual report on inequalities, that the world’s great fortunes had so far emerged unscathed or even strengthened from the pandemic, renewing its call to tax wealth in order to fight “the virus of inequalities”.
“The richest 1,000 people in the world have returned to their pre-pandemic wealth levels in just nine months, while it could take more than ten years for the poorest people to recover from the economic impacts,” he argues. NGO in this report published on the opening day of the World Economic Forum which is held online until Friday.
Globally, billionaires have even seen their fortunes increase by $ 3 trillion between March 18 and December 31, 2020, according to the NGO, which relies in particular on data from Forbes and Credit Suisse.