The elimination of the PAIS tax and the reduction of export duties didn't prevent a strong increase in tax revenues.
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Tax collection is one of the main indicators of a country's economic health and the effectiveness of its fiscal policy.
In Argentina, the Government of Javier Milei has bet on a tax reduction as part of his economic adjustment and deregulation plan.
However, recent data shows that, far from decreasing, tax collection seems to continue growing, which reinforces the remarkable economic recovery the country is experiencing.
The elimination of the PAIS tax and the reduction of withholdings did not prevent a strong increase in tax revenues, driven by Income Tax and VAT.
Javier Milei, presidente de Argentina.
Contrary to the most pessimistic forecasts, national tax collection reached $13.5 trillion in February, with a real growth of 11%. The data, reported by the Revenue and Customs Control Agency (Arca), reinforces the strategy of the Milei Government to reduce taxes without compromising the fiscal surplus.
While the elimination of the PAIS tax and the reduction of withholdings negatively impacted some sectors, this effect was more than compensated by the Income Tax for employees, which caused revenues of $2.6 trillion, with an increase of 43%. Meanwhile, VAT also grew by 6.7%, reaching $4.7 trillion, in line with a greater economic activity.
Additionally, the collection of the fuel tax skyrocketed by 302%, reflecting the update of its rate, while social security showed an improvement of 31%, suggesting a recovery in formal employment.
Javier Milei, presidente de Argentina.
Another key data point is the 20% increase in Federal Revenue Sharing transfers to the provinces, which contradicts the narrative of some sectors about an alleged financial suffocation. Nevertheless, the Milei Government continues to restrict discretionary transfers, in line with its policy of public spending adjustment.
With two consecutive months of real growth in tax collection, Milei gains room to consolidate the fiscal surplus and evaluate new tax reductions, while the state's reorganization progresses without affecting financial balance.
