Buenos Aires Herald 
Buenos Aires Mayor Horacio Rodríguez Larreta announced a bill today to eliminate a city tax on credit card transactions, blaming the national government for the financial hit. It’s the latest move in the federal tax share battle between the Supreme Court and the national and city governments.
“Neighbors cannot wait for political times,” said Larreta in the announcement, which he uploaded to social media. “What I promise, I deliver.”
According to the official press release, Larreta decided to “alleviate people’s financial burdens” despite losing a source of income, contending that although the government refuses to respect a Supreme Court ruling increasing the city’s federal tax share, the tax cut had already been announced. According to City Economy Minister Martín Mura, the credit card tax was implemented to “face the economic-financial impact” of the national government reducing the city’s federal tax share in 2020.
The tax, which was implemented in January 2021, is a 1.2% surcharge on every monthly credit card statement which is applied on purchases made both in pesos and US dollars with credit cards emitted in the city.
Federal tax shares, known in Spanish as coparticipación, are public funds distributed between the provinces and drawn from federal taxes, including income tax, property tax and value-added tax. Each province receives a set percentage of the total.
Before September 2020, the city was getting 3.5% of what the government collected on federal taxes but President Alberto Fernández slashed it to 2.3%. At the time, the city government calculated the credit card tax would help them raise some AR$7.7 billion.
Last December, the Supreme Court ruled in favor of the city, raising its federal tax share from 2.3% to 2.95%. Larreta announced in the same month that he would end the credit card tax at an opposition coalition event since the extra source of revenue was no longer necessary.
However, the national government then filed a lawsuit against the Supreme Court and announced it would pay the difference, but with inflation-adjusted bonds, something the city government heavily criticized.
Larreta said that, even after revoking the tax, he would not stop “fighting” for the city’s federal tax share.
“We trust that the Supreme Court will enforce its ruling, and that the funds start coming in normally and according to law,” he said. “I won’t sit idly while the [national] government does not abide by the institutions.”
