Argentina eyes tax on the rich to raise $4 bln for pandemic response

The government of President Alberto Fernández, who took office in December amid an economic recession and high inflation, has hiked public spending to contain the deepening crisis generated by the COVID-19 pandemic. According to Frente de Todos calculations, the state will face expenses of around 870 billion pesos in August.

Argentina's government is looking to raise around 300 billion pesos ($4 billion) through a one-off tax on the super-rich, in order to help pay for the coronavirus response, support small businesses and bolster energy production. The ruling Frente de Todos party said in a statement it was proposing an extraordinary contribution from people with fortunes greater than around $2.7 million, about 12,000 people. The tax would start at 2% and rise depending on wealth. Overseas assets would face a slightly higher rate.

"There is worldwide consensus that the traditional mechanisms of tax collection have been severely affected by the fall in activity and it is necessary, while the structural problems are corrected, to adopt emergency measures," it said. The government of President Alberto Fernández, who took office in December amid an economic recession and high inflation, has hiked public spending to contain the deepening crisis generated by the COVID-19 pandemic.

According to Frente de Todos calculations, the state will face expenses of around 870 billion pesos in August. The fiscal deficit has also deepened sharply. The South American country, a major grains producer, is headed for an estimated 12.5% economic contraction this year, which would be the third straight year of recession.

The proceeds would be used to acquire health equipment needed for the pandemic, subsidies and loans for small and medium-sized companies, to invest in poor neighborhoods, generate new jobs and to support state oil company YPF.