January 21, 2018
Friday, January 6, 2017

Dujovne kicks off term eyeing payroll taxes, reduced deficit

The country’s new Treasury Minister Nicolás Dujovne, who officially took office this week.
The country’s new Treasury Minister Nicolás Dujovne, who officially took office this week.
The country’s new Treasury Minister Nicolás Dujovne, who officially took office this week.

New minister promises to honour budget, embark on a tax reform and says economy is beginning to grow in first round of public appearances

Newly appointed Treasury Minister Nicolás Dujovne — who officially took office this week after the resignation of former Finance Minister Alfonso Prat-Gay — has announced that he aims to “meet the National Budget’s goals,” revealing that the government has “a fiscal plan independent of (next year’s) elections,” in a series of interviews he gave to the country’s main financial newspapers.

The official also said that he is “worried” about the impact of what he calls “payroll taxes,” a reference to the surcharge labour costs which employers have to pay when hiring workers in the formal system.

“I’m worried about the impact made by labour taxes. The income of those working in the informal sector is half of those in the formal one. That for us is a very important goal: a tax reform which helps add more workers to the formal sector,” the minister stressed, adding that “the money employers have to pay the state for each employee is more than what they pay in other countries of the world which explains why 35 percent of the Argentine workforce is in the informal market.”

In a string of definitions he offered to journalists, Dujovne also said that Argentina’s economy “has already stopped falling and is beginning to grow.”

Thus, he remarked that his ministry “will be able to meet the fiscal deficit figure determined by the budget” and that among his main goals are “to lower the deficit, improve the tax collection and to embody the government’s macro-economic thinking.”

“We seek to go better than the 4.2 percent of gross domestic product set for this year’s deficit, which equals 411 billion pesos. Our plan is to save enough to lower that 4.2 percent,” the economist added.

Meanwhile, the official stressed the need for a tax reform to help formalise non-registered labour and remarked that “to be gradualist does not imply doing nothing but balancing the objectives because there is no money.”

“The government has a fiscal programme which moves independently of the electoral rhythms: President Mauricio Macri looks at the short and long term and has a very clear vision toward where he wants to go, that vision is not changed by the electoral agenda,” he added.

“This year Argentina will lower the deficit again and at the same time it will spend more on infrastructure while reducing taxes and these are three goals which interact within fiscal policy: to improve the quality of public spending, to allocate more (funds) to infrastructure and to reduce the Argentine cost, which can only come with a tax reduction” Dujovne said in conversation with local radio station Mitre.

Last Wednesday, Dujovne held a meeting with the economic team which will work with him during his time in office: Economic Policy Secretary Sebastián Galiani, Legal and Technical Secretary Bernardo Saravia Frías, Treasury Secretary Rodrigo Peña, ministerial Cabinet Chief Ariel Sigal and Chief Advisor Guido Sandleris.

Dujovne formally took office this week after Prat-Gay’s resignation was published in the Official Gazette.

The resolution remarks that thanks are in order to the outgoing official for the valuable services rendered, stressing his “aptitude for the post, his dedication to the service of our country and his commitment to the common good.”

Experts agree that freezing public spending to reduce the fiscal deficit, lowering labour costs, opening up the frontiers to imports and once more becoming a debtor of the International Monetary Fund (IMF) are the government’s main objectives behind appointing Dujovne and Luis Caputo as Treasury and Finance ministers respectively.

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