Tax revenues in August have shown signs of an economy losing momentum, following a rebound in June. Economic activity appears to have decreased in July, raising questions about the sustainability of growth.
After a growth of 0.8% in June, private estimates suggest that economic activity fell again in July, reinforcing the perception of an economy with ups and downs. The Revenue and Customs Control Agency (ARCA) reported that tax revenues from the three main sources, DGI, Customs, and Anses, totaled $20.5 trillion in August, marking a nominal increase of 33.5% compared to the same month last year, although this increase seems to align with or fall below the projected inflation for that period. While the evolution of tax resources is not an exclusive indicator of economic performance, the behavior of consumption-related taxes and banking operations provides insight into the activity of businesses and households in formal sectors.
In August, both the tax on Bank Debits and Credits, known as the check tax, and the Value Added Tax (VAT) reported nominal variations that did not reach the average price increase. According to consulting firm Invecq, the VAT from DGI fell by 3.0% in real year-on-year terms, while the tax on credits and debits contracted by 9.1% in the same period. Similarly, employer contributions also showed negative results, with a real year-on-year decline of 1.5%.
Analyst Ignacio Morales of Wise Capital indicated that tax collection interrupted the slight improvement observed in July, showing a clear stagnation. In year-on-year comparison, resources fell by 3.8% in real terms, representing an estimated loss of approximately 6.5 trillion pesos. The drop in consumption has negatively impacted VAT, which only increased by 25.3%. On the other hand, the tax on credits and debits experienced a nominal increase of 21.5%, but still fell below the projected inflation of around 33%. ARCA noted that the year-on-year comparison of the tax was affected by one less business day compared to August of the previous year.
The IPS also saw a nominal increase of 29.6% during August, which also fell below the inflationary dynamics. ARCA explained that part of the result was due to taxpayers using tax credits to pay other tax obligations, and a decrease in offsets of other tax debts. This situation compelled the Government to make adjustments to maintain the fiscal surplus, with a report from Analytica revealing a 10.3% decline in primary spending accrued in real terms during August.
Consulting firm sources suggest that tax information indicates a decline in activity during August, especially when observing VAT and the check tax. Although the harvest diluted and the mining sector maintained its activity, the industry faced rising costs and challenges in the energy sector, leading companies to liquidate inventories and restrict production. Considerations from consulting firm LCG point out that revenues from other taxes were not sufficient to compensate for the decline in collection associated with consumption, highlighting a trend of economic weakness in the month of August.
Source: www.infobae.com
