10 points above inflation

Last month, the increase in collection was driven by Fuels (+ 84.3%), VAT (+ 75.9%), Internal Taxes (+ 55.5%) and the Tax on Credits and Flow rates (+66.0%). On average, the increase in these taxes is of the order of 74%, largely exceeding 50% of cumulative inflation. The contribution of levies on exports was also good in August, with an increase of 131.9%.

The official enthusiasm for these data is that the consumption variable now underlies the collection, which could continue to favor the income level into the remainder of 2021, keeping the difference 10 percentage points above the price increase. If that happens, by the end of the year the true final collection would be at a surplus level, even despite the failure of the official 29% measure of inflation for all of 2021 that appears in the budget.

Relevance

The importance of data is twofold. In the first place, this implies, as this journal progresses, that the budget deficit programmed for 2021 of a primary imbalance of 4.5%, not only will not be exceeded, but it could be at a level below 4%. This despite the electoral increase in the level of expenditure which is projected for the September-November quarter. Even by calculating an acceleration in expenditure items, the penultimate month of the year could be reached in the 3% mark of GDP, and then give way to a December when the level of budget executions is still accelerating. . The final objective will be not to reach this 4% and to display a more controlled platform by 2022. The other side to which the improvement of collection contributes is that next year without an increase in taxes can be considered. , leaving aside two suspicions that haunt the markets. these days. In the mind of the Executive, neither a revival of the contribution to large fortunes nor an increase in the tax burden on large companies are budgeted. If there is finally some type of tax reform proposal, it will remain so for 2022 with actual execution in 2023.

Finally, the improvement in recovery on inflation reassures Martín Guzmán and his negotiators before the IMF. It is known that one of the variables that the financial institution will examine will be that the tax revenues on which a deficit reduction is to be calculated are real and better when inflation increases. And that in the projection for the five-year period 2022-2026 it has non-fictitious terms when calculating the serious income on which the rest of the variables will be based.