To have and have not
Argentine political analysis is increasingly introspective but sometimes it is worth looking at developments in the wider world in order to place things in perspective. The substantial rise in the tax burden over the past decade has led to plenty of local moaning and groaning at both national and provincial level (not only on the business side but also seeping into collective bargaining) while the Congress commission to probe tax evasion via over 4,000 Swiss accounts opened with the aid of HSBC is presented by some pundits as one of the most inquisitorial faces of this new fiscal aggression. Yet last week there was news for such critics — the developed world held up as a model for local populism seems to treat errant banks far more harshly. Or at any rate that is the conclusion to be drawn from five major banks on both sides of the Atlantic being fined almost six billion dollars for exchange rate manipulation with the investigations far from over. Fines on this scale make the Congress commission chairman Roberto Feletti seem almost a dove by comparison — even if six billion is small beer for a global financial market which moves sums 25-30 times the size of the real economy.
Yet the next day came news that placed the issue in a much broader context than a few thousand tax evaders — the Organization for Economic Co-operation and Development (OECD) report showing the income gap between the rich and the poor in the world to be wider than ever, an inequality which is not only social injustice but also an economic bottleneck. It would be naive to expect supposedly self-correcting laws of the market to remedy this problem since these laws seem to be the disease more than the cure — nor can the future be trusted to produce a solution because the expansion of informal, precarious and part-time employment is given as a prime cause for the poor falling behind when almost half the world’s jobs have been made potentially obsolete by technological change while youth (half of which is jobless in some economies) is especially vulnerable. Instead this situation calls for increased government action to address this inequality (as the OECD report spells out) and this in turn means more taxation, both to fund corrective action and to counter the imbalance.
A rising tax burden should therefore not be the occasion for either surprise or indignation. Complaints about the quality of spending and the value for money from public services might be more legitimate and the tax system could do with reform but Argentina can only aspire to parity with developed countries by bringing those public services up to their standards, not cutting taxation below their levels.