Retention: Increase for collection only

Retention: Increase for collection only

The increase in containment caused the field to react with tractor trailers and assemblies
The increase in containment caused the field to react with tractor trailers and assemblies

Our latest AmplificAgro survey, conducted in late March, focused on revealing an atmosphere of thought about growth. Restraints Announced by the government (in soy flour and oil). In this regard, 95.3% of respondents said that this increase was mainly aimed at collection. Only 3.9% think it aims to mitigate the impact on inflation.

But how do we get to this situation? Why increase arrests? At this point, sharing that Argentina’s macroeconomic situation is “delicate” is not new: High debt, rising inflation, low economic activity, poor social performance, devalued currency, etc.

One of the closest problems to the political sector is the “fiscal deficit”. There are only two ways to finance a fiscal deficit: issuing government debt or issuing currency. Neither is macroeconomically free and both carry risks. In fact, much of Argentina’s problems are related to the misuse of money and the issuance of public debt.

But how does a fiscal deficit arise? It is simple when the state spends more than it collects, a fiscal deficit arises, and when they manage to save, it is called a fiscal surplus. The government is finding serious constraints to continue financing the fiscal deficit, leaving it with two main tools:

  • Reduce government spending
  • Increase tax collection

It is clear to the agricultural sector that the government’s position comes from the second option: to increase revenues through taxes. Unfortunately, these types of measures lead to negative and distorted effects, which goes against what Argentina needs: more production, more investment, more exports and more employment.

For its part, the study also highlighted the increase in export tax rates, which Agriculture Minister Julian Dominguez called “temporary” decisions. In this regard, 97.6% of respondents said that these statements are less or not at all credible.

Author is an economics graduate, business consultant and co-founder of AmplificAgro

Source: La Nacion