Pilar’s decision to raise the municipal tax rate for supermarkets and shopping centers to 2% led to a short circuit between the national government, businessmen and the mayor of this city himself, Federico Achával, who is 45 years old, reacts to Peronism and has been in power for six years.
-Why did the rate increase?
-Because municipalities are given more and more powers in the areas of health, education, security and public works. And to meet this need, we must precisely be able to raise funds to carry out our government administration. In addition, in the past, municipalities have had the opportunity to receive funds from the state, the province and self-generated resources. And today, since this government has been in office, we have not received any support from the national state for social programs, for example.
– Will rising taxes continue or will the tax rate fall?
-NO. Because in order to reduce tax rates, the government must reduce VAT. Beyond tariffs as a concept in municipalities, it seems important to us to discuss the underlying tax issue in Argentina and to contribute to this discussion. If the national government exempts municipalities from VAT, the rates may be reconsidered.
-And why is reducing tax rates a condition for reducing VAT?
-Municipalities now pay 21% VAT and we have no chance of getting it back. Because a community like Pilar, which has ever-increasing needs, will pay $55,000 million in sales tax this year. By co-participating, they give us back $22,000 million, which means we have a negative VAT system of $32,000 million. I pay VAT on medicines, medical supplies, health services, meals, infrastructure works and even funerals.
-But in any case, VAT affects all municipalities, not just Pilar…
-Yes, of course. It is not just a need of the municipality of Pilar or a municipality in the province of Buenos Aires, it is a reality that all municipalities in Argentina suffer from.
-What do they do with the money from the fees?
-With the tariffs we charge we have to support the municipal hospitals in Pilar. We have to strengthen the security system with cameras, with cell phones, with personnel, with a surveillance center. In addition, we must strengthen the education system because the central goal of our policies is to eliminate the deep inequalities that exist in our territory and we believe that education is the most transformative and equalizing public policy. This is the background discussion we want to have.
-And translated into numbers?
-Since Milei took office and public works stopped, we have built 2,000 asphalt blocks, we have built 16 schools and 3 hospitals and are building a university. What must not happen now is that your taxes and, in the case of municipalities, the fees do not flow back to your neighbors, to works or to public measures that serve to improve life.
-Does the tariff apply to all supermarkets?
-The tariff applies to large supermarkets, hypermarkets and shopping centers. This does not apply to neighborhood stores.
-And how much is Pilar’s income?
-Pilar has a budget of $488,000 million for 423,000 residents, plus 150,000 on weekends in country clubs and gated communities. Now what you also need to consider are two things. The first is the interface and the other has to do with the fact that this budget not only has to do with day-to-day management but also solves infrastructure problems. For example, the city of Buenos Aires has an area of 222 square kilometers, that is, Pilar is one and a half times larger than the city of Buenos Aires and has a multi-billion budget.
-But Pilar has one sixth of the city’s population?
-Well, that’s why we believe it is necessary to discuss in depth the tax burdens, and in our case the tariffs, of the entire Argentine economy.
-What do you think Milei did well?
-The concept of budget surplus is positive for the Argentine economy and lower inflation is a necessity to bring peace to society. Then we have to discuss how it was achieved and who it affected, but the concept of balancing the budget and reducing inflation is fine.
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