Argentina Wealth Tax Fought by the Rich Raises $2.4 Billion

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Argentina’s government raised 74% of the amount it had targeted from a controversial new tax on the country’s wealthiest citizens.

The government collected 223 billion pesos ($2.4 billion), according to an official statement. Early data show that 10,000 people with assets over 200 million pesos paid the new tax, which goes as high as 5.25% of their assets’ value.

Initiatives to tax the rich have gained support throughout Latin America as the region struggles to recover from its worst recession in two centuries. In Argentina, millionaires resisted paying the levy right up to the government’s April 16 deadline. In early April, only 2% of taxpayers subject to the levy had paid it, according to a preliminary report.

The amount raised is higher than expected, equivalent to 0.5% of GDP, and will improve the government’s tax collection numbers for April, according to Buenos Aires-based consulting firm Alberdi Partners. The government expects to use the proceeds for pandemic spending including health policies, small business subsidies, scholarships and housing projects.

The government announced it had raised 817.9 billion pesos in taxes in April, up 105.2% from the previous year.

Local Pushback

The tax was met with local backlash by those affected. About 220 taxpayers, including the family of late soccer legend Diego Maradona and soccer star Carlos Tevez, took legal steps against the government to avoid paying, claiming it’s confiscatory or unconstitutional. If the justice system rules against the tax, that would create a setback for the government, according to Marcos Buscaglia, founder at Alberdi.

“It’s likely that part of the proceeds will have to be returned to taxpayers if the judiciary rules against the tax,” Buscaglia said.

Some tax lawyers say that the real number of millionaires in Argentina is much higher than the figure from the AFIP, the tax authority, meaning that thousands may be holding onto their cash.

“The data released by the taxman is an attempt to show that lots of people are paying, but it does not reflect reality,” Ivan Sasovsky, CEO of tax law firm Sasovsky & Asociados said.

Even though the deadline has passed, wealthy Argentines are expected to continue filing challenges to the tax. Gaston Miani, a partner and head of tax and customs law at Tavarone, Rovelli, Salim & Miani, said he expected at least 5,000 suits to be filed during the month of May as lawyers and clients gather proof to show the tax’s harmful effects.

AFIP wasn’t immediately available for comment.

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