The discussion about the so-called withholdings has returned. A tool that has been used in Argentina for a long time and affects the productive and export capacity.
These are taxes on foreign sales that, by especially affecting agro-exports in our country (which account for 68% of total foreign sales), they create problems in the competitiveness of the most efficient sector. They reduce the profitability of production and marketing, generate less propensity to invest, affect the competitiveness of the entire chain and create distortions that especially impact SMEs that have a smaller production scale. They discourage (by reducing economic capacity) productive technological development, affect the linkage of the agro-productive circuit that is linked to other sectors of the economy, affect the efficient systemic allocation of resources, generate distortion in the functioning of the chain itself and they create political tensions that create problems for long-term plans and even for carrying out day-to-day business operations (which must adapt to changing conditions in an unpredictable way).
An example of the importance of the affected sector is that in Argentina no less than 9 of the 10 largest exporting companies are agri-food. So are 11 of the 20 largest exporting companies and 17 of the 30 largest exporting companies, as well as 24 of the 40 largest exporting companies and also 28 of the 50 largest.
Argentina, since the beginning of the century, reincorporated export taxes as a source of fiscal collection. This could be, according to the exposed data, affecting the competitive capacity even in these most efficient items, in times of growing global productive demand.
The practice of imposing high taxes on exports is something exceptional on the planet and that few countries do in a significant way. Specifically, According to the latest figures from the World Bank, only 7 countries levy export taxes in figures that generate more than 10% of the total tax collection on foreign sales. Argentina is one of them. Argentina, in addition, is among the 5 countries that generate the most collection for withholdings according to the data of the entity of the last registry (2019/2020).
They are Kazakhstan, Russian Federation, Solomon Islands and Belarus. Argentina, thus, is in fifth place on that list (after Argentina, Guinea-Basau, Ivory Coast, Niger, Papua New Guinea, Benin and Tanzania appear in that ranking).
Given that the most affected by these taxes is agro-production, it is appropriate to note that it no longer depends – as in the past – so substantially on natural conditions but (now) of the systemic competitive capacity. Investment, technology, infrastructure, knowledge and know-how, engineering, organization and management, machinery, applied scientific development, all are relevant. Which requires microeconomic conditions. appropriate mesoeconomic and macroeconomic
Argentina, according to the FAO, generates 2% of all world food exports with varying degrees of processing. This percentage (which is maintained in the data -even unofficial- of 2020 and 2021) quadruples the degree of relevance of the Argentine economy considering it in its entirety in the world.
In terms of production measured in tons, Argentina produces 1.92% of the total (primary) grains on the planet. Argentina is in the relevant 17th place in the list of largest exporters of agri-food products on the planet according to the latest FAO records. It competes with very efficient countries: it is, in that list, below (in alphabetical order): Australia, Germany, Belgium, Brazil, Canada, China, France, India, Indonesia, Italy, Mexico, the Netherlands, Spain, Thailand, United Kingdom of Great Britain and the United States.
None of these countries is on the World Bank’s list of those that levy relevant export taxes.
For this reason, it should be noted as a matter of caution that in the measurement of fixed capital formation (investment) as a percentage of the total value added in agro-production generated in the world (comparing countries), according to the same FAO, Argentina is in the 37th place -in the world- and exhibits a ratio of 21.3%. That is: in a place in the ranking much lower than the one he has as a producer.
According to the cited source, the added value generated by agriculture, forestry and fishing worldwide grew by 72.8% since the beginning of the century (year 2000) until the last record (2019), while in Argentina that growth was 42.3%. Simultaneously, in the latest FAO record, Argentina participates in 0.95% of the world total, while in 2000 it did so in 1.15%.
Argentina, since the beginning of the century, reincorporated export taxes as a source of fiscal collection. This could be, according to the data presented, affecting the competitive capacity even in these more efficient items, in times of growing global production demand.