S7 Ep20: Argentina’s 2017 tax reform

About this episode

Sebastian Galiani discusses Argentina's 2017 tax reform and the challenges of implementing it amidst political and economic constraints.

In 2017, Argentina had the highest corporate income tax rate in Latin America. Reducing it was politically popular and economically desirable. Getting it through a Congress where the governing coalition held just 19% of Senate seats, while the fiscal deficit ran at close to 8% of GDP, was a harder problem. A package of reforms was planned, revenue-neutral and phased over five years: corporate tax on reinvested profits would fall from 35% to 25%; a minimum-wage deduction would reduce the payroll tax burden on firms employing informal workers; energy, alcohol, and sugar taxes would be reorganised on rational, emissions-based principles; and provincial governments would agree to phase out the cascading "ingresos brutos" sales tax in exchange for limits on public spending. In this week’s VoxDev Talk, Sebastian Galiani, who served as Deputy Minister of Economy in Argentina and led the design of the reform, tells Tim Phillips how the Macri government attempted to reform its tax structure, and what it teaches us about policy. Credibility, he says, was the biggest constraint: in a country as economically volatile as Argentina, what matters is not only what the law says, but whether…

People in this episode

Host: Tim Phillips

Guest: Sebastian Galiani

Topics covered

• tax reform
• Argentina
• economic policy
• corporate tax
• government
• fiscal deficit

Keywords

• tax reform
• Argentina
• corporate tax
• fiscal deficit
• economic policy
• government
• Sebastian Galiani

Mentioned in this episode

Organizations: Macri government, NBER

Books & works: Motives and Constraints in the Implementation of Argentina's 2017 Tax Reform

Places: Argentina, Latin America

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