What Milei said about taxes

On one hand, with the withholdings that we have been lowering and that our long-term plan is for them to disappear.

But beyond that, and the whole series of tax reductions we made, which already reach almost four percentage points of GDP, something no one did in Argentine history, that is, giving back to Argentines four percentage points of GDP. So, with which we made fiscal adjustment by lowering spending, not raising taxes. But what I find most interesting… boys, we eliminated the 200% gap, and that was doing much more damage, and I remember the first meetings…

But for that signal to work, the price has to be true without any kind of distortions like inflation or price controls. It’s no coincidence that, when these distortions appear, product shortages start happening. This happens because production is disincentivized. The trip is taking its toll on me.

Therefore, the first thing we did was consolidate fiscal balance to stop issuing, we let the price system function correctly and allowed for a proper allocation of resources in our economy. Thus, annual inflation went from being 211% per year—actually, when we arrived it was going at 1.5% daily—to around 30% today. At the same time, this allowed us to lower taxes by four percentage points of GDP. And there always appears someone who says, ‘I want a surplus, but…’

Competitiveness is built by making it easier to set up businesses in the country, both bureaucratically and in terms of taxation. That is why, as the surplus allows us, we continue to lower taxes. Thanks to that, we were able to present a consistent plan for permanent reductions in withholdings that offers more predictability to the agricultural sector, and we work tirelessly to eliminate this nefarious invention forever.

And I say this as Head of State. Therefore, not only have we lowered public spending, but we have lowered it to the extent that we additionally reduced more than three points of GDP; we lowered almost four points of GDP in taxes.

If we manage to maintain our program and the Argentines decide to support us next year, until 2031 we would be returning to Argentines 500 billion dollars in tax reductions. That indeed is freeing them from the burden of taxes, which are theft.

Having said this, let’s go to the issue... Oh, well, there was another option regarding the deficit. Yes, there was the option to raise taxes. Well, not for us. In fact, we lowered them. So the only alternative was to reduce public spending; there was no other option. In fact, the true fiscal pressure that a government faces is the size of public spending. So, you will have to finance it somehow.

This also has consequences in electoral politics. There are people who tell me: no, no, we have to relax the fiscal balance, we have to relax monetary policy… Two stupidities the size of a house. That is, first, economics 101: a negative supply shock is not fought with a positive demand shock. What part don’t you understand that doesn’t work? If you have a negative supply shock, what you have to do is lower taxes and deregulate. Well, we deregulated everything we could, and we lowered taxes based on not letting the fiscal result explode.

The Treasury deficit, which they said we couldn't eliminate over the course of... not even in 5 years, 6, well, we eliminated it in the first month of management. And the quasi-fiscal deficit, which was 10 points of GDP, we resolved in 6 months. That is to say that in 6 months we made a fiscal adjustment of 15 points of GDP, we lifted the pressure off the private sector by the equivalent of 15 points of GDP and not only that: we have continued making adjustments and it allowed us to lower taxes for the first time in history by four points of GDP.

And in all this, the task of the State is very simple and I have already explained it: stop being a nuisance. Keep removing obstacles, continue lowering taxes as the surplus allows, and provide the rules so that no future government can roll them back. When it comes to tax reduction, we have not only lowered it by four points of GDP. If we manage to consolidate in the elections and validate the model, starting to have growth consistent with all we are doing, think that the country risk for what is our management, that is, what matures by 2027, is very, very far below the general country risk.

We ended the monetary issuance that was used to finance the fiscal chaos, which resulted in rising inflation that hit the most vulnerable. And all this we accomplished not only without raising taxes, but we also lowered them by the equivalent of two and a half percentage points of GDP, and we did this because we not only believe that taxes are theft, but also because the adjustment had to be made by politics.

At the same time, please change places. But of course, you add with difficulty, you don’t know what it is to move a ravioli inside an organogram.

At the same time, this has allowed us to advance with the elimination of taxes, such as the PAIS tax, withholdings on regional economies and various productive chains. We also reduced VAT and income tax perceptions on imports of basic goods, tariffs on clothing, fabrics, appliances, tires, motorcycles, industrial inputs, fertilizers, herbicides, and electronic products.

We lowered internal taxes on cars and motorcycles, tariffs for hybrid and electric cars, tariffs on cell phones and internal taxes on electronic products and the internal tax on insurance. Now all that’s left is for the provinces and municipalities to do their part, for which we have facilitated a tool to report excessive fees, checking it on a page.

And those conditions also imply, by definition, lower interest rates, which are not achieved by printing money, but by reducing country risk based on fiscal balance and stimulating savings. Because a business that does not make money is a business that closes or a business that simply never opens. And that is what happens when taxes are systematically raised, fiscal balance is torpedoed causing country risk to rise, property rights are violated, and the rules of the game are changed on the fly, as we have done for so many decades.

Additionally, the fall in inflation has revalued wages and pensions, improving the purchasing power of all our citizens. At the same time, private credit has returned and we have been witnessing a sustained boom in mortgage loans for over a year. Simultaneously, we are already traversing the path of tax reduction, making our private sector more competitive. And as if all this were not enough, we are opening up to the world like never before. In the long term, we will grow even more because our goal is to become the freest country in the world.

For that, we will continue to reduce the overall tax burden, whether through the elimination of the inflation tax or by reducing direct taxes that we are undertaking alongside the fiscal surplus.

Finally, the normalization of the foreign exchange market that we are announcing today makes foreign direct investment possible again, since one only invests when they know they will be able to access the fruits of their investment as they wish; this will be a new engine of growth. That is, during the last 15 years, policy has put a chokehold on investment and opened the faucet of public spending and monetary issuance. We did the opposite, we have put a chokehold on the State, a chokehold on issuance, and we have freed the faucet of private initiative so that investments can finally come to Argentina.

We have moved from an economy where installments had ceased to exist to an economy where there are thirty-year mortgages. That is to say, we have gone from talking about hyperinflation to talking about long-term stability. Along the way, we eliminated and reduced taxes and tariffs of various kinds, seigniorage, which is the issuance of money to finance the deficit that translated into inflation and stole fifteen percentage points of GDP from Argentines; the Country Tax, and definitively eliminated export taxes for regional economies and temporarily for traditional products, which we will eventually eliminate sooner or later.

We also eliminated the tax on property transfers, updated the income tax thresholds for self-employed individuals, updated the thresholds for the single tax, reduced Personal Assets tax, and carried out the most successful capital amnesty in history, despite the doomsayers claiming it would be a failure.

Moreover, we reduced tariffs on a large number of imports, eliminated internal taxes on the buying and selling of cars, and reduced import duties on electric and hybrid vehicles. As a consequence of all this, the economy in the year 2024 from the start to finish in year-on-year terms not only did not fall but grew by around 5% from peak to peak. This happened against all the predictions of the doomsayers who forecast a vertical decline in economic activity from which we would not recover. This is interesting because any other experience with half the adjustment would have resulted in declines between 10% and 15% of GDP.

This means that, if this methodology is maintained from now on, we will not only be able to reduce taxes but also the size of the state, which is the real tax pressure. I want to repeat it to be clear and devoid of doubts: this methodology we are presenting in the national Budget safeguards the fiscal result, whatever the macroeconomic scenario may be. No matter what happens to the economy, no matter if our estimates are right or wrong.