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The "zero" retentions -as some politicians propose- is "a great wish" but "factually" it is necessary to "rethink it with low chances of making it true". Instead, it can be "gradual."

That was the conclusion of the talk “Zero withholdings? How could they be implemented? Possible impacts and models”, organized by Los Grobo, Mauá and the Agricultural Foundation for the Development of Argentina (Fada) in which the economists Roberto Bisang and Agustín Tejeda, from the Buenos Aires Cereal Exchange, spoke.

Bisang, an economist at the Interdisciplinary Institute of Political Economy of the UBA, pointed out that, in the short term, the axis goes through fiscal balance, an objective that faces two "locks", that of the almost null possibilities of public financing and that of the dangers of broadcasting. In this context, the tax contributions of withholdings are key.

He warned that not being able to go to zero immediately does not mean letting go of "the windows of opportunity" that appear in the "chaotic" world.

"In this crisis of rearrangement it is necessary to establish some mechanism of incentives and relative prices that lead to a new productive matrix," he pointed out.

In his opinion, progress can be made towards the gradual extinction of withholdings, with their replacement by other taxes, such as an income tax account -he clarified that the numbers are not "completely" compatible-, an update of the income tax land and a reorganization of public spending.
critics

Bisang started by stating that, in general, withholdings come with other "brothers" such as obstacles to exports, trusts or cross subsidies. "They are a key issue that affects multiple aspects," he defined and reviewed a series of examples to add that "they survived 100 years as part of economic policy."

He stated that a good part of the decisions are made with situations from decades ago when there are new realities, such as the belief that for agriculture, costs are denominated in pesos and income in dollars. He also stressed that it affects the added value at the same time that it makes Argentina "miss the train" in international reintegration.

Tejeda ratified how “distortive” the retentions are and explained that the Argentine case is only comparable, internationally, with India and Vietnam due to the level of reduction in the gross income of the producers. Between 1997 and last year, the sector transferred US$193 billion of its revenues to the state.

With current policies, he estimated that, in the case of wheat, it would grow 15% in the next ten years, while with incentives, it would be 40%.

The economist analyzed the negative effect on the sown area - which he rebounds when the load is reduced - and on the incorporation of technology and the use of fertilizers. In terms of production, he compared Argentina with Brazil: until 2000 it was almost the same production and in the last 20 years, the local one was half.

In what he does to the evolution of grain exports with respect to the Mercosur partners, from 1960 to 2020 that of Argentina was the lowest. “We have been constantly losing participation in the world; in the last 20 years we have been below the international improvement line and we are concentrating the export basket in fewer products, fewer destinations and less unit value”, he summarized.

For regional development, with zero withholdings, producers from all over the country would have profitability, whereas with an average of 12%, this possibility is concentrated in the central region.

On the consumer side, Tejeda indicated that "there is practically no correlation between the international price of wheat" and that of processed products. Since 2017, he explains 10% of the bread price variation while 11% corresponds to the exchange rate. The rest depends on other factors such as salaries, logistics.

How much would it cost to compensate for the increase in the price of products made from wheat? He calculated that about US $ 162 million in all of 2022, thinking of a direct subsidy to the consumer. Meanwhile, the extra that will be collected for the best international price is US$150 million. → Go to article

Automatic translation from spanish.