JAVIER CANOSA MENTIONED IN TAXNOTES.COM
Posted on Oct. 23, 2024 By William Hoke.
See article at: https://www.taxnotes.com/tax-notes-today-global/tax-system-administration/argentinas-milei-restructures-tax-agency-eliminates-3100-jobs/2024/10/23/7mfyf
Javier Milei, Argentina’s libertarian president, said his government will restructure the national tax agency and eliminate more than 3,100 jobs that were added “irregularly” during the administration of his predecessor, populist Alberto Fernández
On October 21 Milei’s office said the government will dissolve the Federal Administration of Public Revenue (AFIP) and replace it with the Customs Collection and Control Agency (ARCA), “a body with a simpler, more efficient, less expensive, and less bureaucratic structure.”
It said the restructuring will reduce the number of the AFIP’s “upper authorities” by 45 percent and the agency’s “lower levels” by 31 percent, and result in annual savings of ARS 6.4 billion (about $6.5 million).
Milei, a self-described “anarcho-capitalist,” won a runoff election for the presidency in November 2023 against Sergio Massa, who was handpicked by Cristina Kirchner, a former president and vice president of Argentina. Kirchner had seen Massa as the standard-bearer of the Peronist Party, which dominated Argentine politics for most of the previous 35 years.
With inflation running at an annual rate of almost 150 percent and the poverty level and public debt skyrocketing during Massa’s term as economy minister, Milei told voters during his campaign that he would eliminate many taxes, cut the number of government ministries by more than half, eliminate the Central Bank, and dollarize the economy. (Fernández decided not to run for a second term.)
The restructuring will lead to the firing of many tax agents who were added while Massa was in charge of the Ministry of Economy. “In addition, 3,155 agents who entered the AFIP irregularly during the last Kirchnerist government will be let go, equivalent to 15 percent of the current staff,” Milei’s office said. “This step is essential to dismantle the unnecessary bureaucracy that has hindered the economic and commercial freedom of Argentines.”
The president’s office said the head of the AFIP was being paid ARS 32 million a month, while the directors of the agency’s tax and customs units were each being paid ARS 17 million a month. Under the restructuring, the incoming head of the ARCA, Florencia Misrahi, will be paid approximately ARS 4 million a month, the salary of a Cabinet minister. Misrahi’s main deputies will each receive salaries equivalent to that of a Cabinet secretary, the president’s office said, without specifying the amount.
Salaries a Past (and Present) Concern
Javier Canosa, a tax lawyer with Canosa Abogados, said the restructuring of the AFIP is necessary. “It was too big, too bureaucratic and burdensome, with salaries that were totally out of market rationality,” he said in an email. “The previous Peronist governments introduced scores of ‘employees’ with extraordinary salaries whose aim was to persecute political opponents. It is a very welcome decision.”
Marcos Falcone, a political scientist with Fundación Libertad, a think tank that focuses on economic research and advocates for the liberalization of Argentina’s economy and society, said Milei’s decision to replace the AFIP with the ARCA makes sense. “By creating a new agency rather than dealing with existing structures and regulations, it will be easier to remove privileges within AFIP,” he said. “AFIP’s top employees were making up to eight times the president’s salary, but nobody will be allowed that going forward.”
Falcone said there are still unresolved issues, “such as the fact that all AFIP employees earn a fixed percentage of tax collection, which is part of the original problem.”
Canosa said a streamlined ARCA will likely collect more tax revenues than its predecessor. “This is a measure aimed at reconciling the citizens with the tax collector,” he said.
Falcone said he doesn’t expect the restructuring to affect tax collections if, “from now on, salaries rise on par with private sector jobs.” However, he added, “some people are concerned that top talent could flee AFIP.”
