Income, for now, is not a big problem for Juan Schiaretti at the start of his last year at the Civic Center.
It is that despite the fact that inflation “flies” above 100% year-on-year, co-participation shipments are also advancing, even a few points above the record of the increase in average prices.
It is key that these transfers continue at full capacity because the federal co-participation of taxes and funds make up the bulk of provincial income, since as a whole they represent around seven out of every 10 pesos that enter the Honeycomb monthly.
The total amount of the co-participation grows hand in hand with two taxes that, in turn, represent 90% of those shipments: VAT and Profits.
With runaway inflation and Profit caps slowed down, the volume of automatic shipments from the Nation to the provinces continues to grow nominally strong month by month and, barely, also in real terms.
In total, in March, the Nation sent 65,401 million pesos as co-participation, 109.1% more than the 31,279 million transferred in the same month of 2022.
The data belongs to the National Directorate of Provincial Affairs and was published this weekend by the Ministry of Finance of the Nation.
The increase is regarding 3 points higher than the year-on-year inflation estimated for last month (the final data will be known on March 14), but it shows that the real increase is no longer the same as the very good records of most of the months of 2022, when transfers far outpaced prices.
If the entire first quarter is computed, between January and March the Nation transferred 187,042 million pesos to Córdoba, 102.8% more than the same period in 2022, with an average year-on-year inflation of 98.5%.
differences
This week, the Province will announce the total collection, which includes, in addition to the co-participation, own taxes.
In this section of provincial income, the worst role is being played by assets (Real Estate and Automotive), which lose month following month with inflation and each time represent less in the cake of the global collection of the Honeycomb.
The Province’s own income is recorded in Gross Income, which collects 75% of the total “local” taxes. Like VAT and Profits, Gross Income is a regressive tax and tied to the level of activity, a scenario that the Province wanted to avoid at the beginning of the second Schiaretti government, but with the increase in inflation and the crisis that has hit the country since 2018, it was not possible.
The increasingly strong weight of Gross Income in the finances of the provinces, including Córdoba, resides in the “ease of collection”, since it is limited to taxing the billing of companies. This strategy is the simplest for governments in inflationary periods, because updating is automatic, with no effort from the State, since it rises along with prices.
On the other hand, both VAT and Gross Income are attractive taxes from a political point of view because they are diluted in the price of goods and services and people do not make a direct association between a given government and tax pressure.
