The Argentine Industrial Union (UIA) and the US Chamber of Commerce in Argentina (AmCham) have criticized declarations by the national government last week that it would not comply with a Supreme Court ruling to restore a greater share of tax funding to Buenos Aires city.
AmCham said in a statement that the government’s decision to challenge the Supreme Court’s ruling was a risk to “the legal order upheld by our National Constitution” that constituted an “institutional breakdown of the republican system”, as well as violating the separation of powers.
UIA chairman Daniel Funes de Rioja voiced similar concerns in an interview with CNN, saying: “Any investor or person willing to provide needs to know the rules of the game. And the first rule of the game is the Constitution.”
Following the Supreme Court’s ruling last week ordering president Alberto Fernández’s administration to partially restore tax funding to the opposition-governed capital, president Fernández and his allies in government initially stated that they would challenge the ruling and attempt to remove the supreme court Justices from the case. However, on Monday Fernández said that the national government would transfer the funds to the city in the form of bonds.
The conflict over distribution of federal tax revenues started in September 2020, when Alberto Fernández’s administration reduced Buenos Aires city’s share of the funds from 3.75% – a percentage set during Mauricio Macri’s presidency – to 2.32% in order to direct more funding to Buenos Aires province so it could increase police wages after a series of protests by officers. The proportion of tax funding destined to Buenos Aires city was later cut further, to 1.4%, following a congressional debate.
Buenos Aires city government appealed the decision to the Supreme Court, which ruled that the federal government must increase the capital’s share of the funding to 2.95%. The President and governors of over a dozen provinces criticized the ruling for being unfair to the rest of the provinces as well as being impossible to implement after the budget of 2023 was approved.