06/04/2014 -
Edition 542

$2 out of $3 of the increase in fiscal pressure goes to the central gov’t

Given requests by legislators, motivated by the aggravation of the insecurity, the Cabinet’s Chief of the central government made clear that management of police and justice is a provincial responsibility. This assertion is partially correct, since a great part of the problem relies on the centralization of public funds. In any case, self-criticism among the provincial administrations is also required since they are also responsible for the lack of federalism and mediocrity in the management of their responsibilities.

The lynching occurred in several locations in the country express the saturation and the total loss of confidence in the institutional mechanisms of prevention and punishment of crimes. Obviously far from providing solutions, spontaneous acts of violence add uncertainty to physical integrity and property rights. This is why it is so pertinent and urgent to restore the efficacy of instruments available to any modern society in combatting insecurity, namely the police and justice

When the issue was debated in Congress, it was concluded that the responsabilities relies on the hands of the provinces, namely the administrations to which many of the deputies and senators represent. The proposition is correct since crimes that most often afflict people are supposed to be prevented and penalized by the provincial police and judicial systems.

However, a complete analysis requires considering the distribution of fiscal resources between jurisdictions. In this regard, data from the Ministry of Economy referring to national and provincial tax collection highlight that:

· Between 1993 and 2002, tax burden was on average 21% of the GDP, 9 of which were automatically assigned to the provinces while the remaining 12 percentage points went to the central government.

· In 2013, the tax burden increased to about 37% of the GDP, 14 went to the provinces while 23 percentage points were assigned to the national government.

· This means that tax pressure increased 16 points of the GDP over the past decade, but 11 points or $ 2 of every $ 3 went to the central government.

This information, which excludes inflation tax, shows the impressive growth of the tax burden in Argentina, prove of this is that the country has reached the highest tax burden in Latin America. More important is the fact that most of the increase of public funds was appropriated by the national government. That is, the jurisdiction which according to the Constitution, not only is not in charge of the management of police and justice, but also has no responsibility for the administration of schools, public hospitals, urban infrastructure and social housing.

A bigger public sector under this level of centralization generates a worse state. Citizens pay increasing taxes while insecurity increases, education and public health deteriorate, and investment in infrastructure and housing is inadequate. The reason is that the bulk of public resources flow to the tier of government that has no responsibility for these services. Hence centralization threatens the construction of an efficient state.

The degradation of the federalism merits a profound self-criticism in the provincial political systems. For example, when the national government promoted the reform of the pension system the vast majority of deputies and senators, representatives of the provinces, voted to abolish the scheme of capitalization ignoring that the appropriation by the ANSES of the 15% of tax revenue assigned to the provinces was justified to finance a system which would no longer exists. This error and its implications are so serious that several provincial governments have resorted to the Supreme Court in order to correct the mistake of their representatives.

The violent reactions of self-defense against delinquency are equivalent to migration to private schools, private health insurance plans or the illegal occupation of public spaces. They are spontaneous and many times desperate measures against the degradation of the State. To reverse this process requires not only more federalism in the distribution of tax revenues, but also less mediocrity and professionalism in the management of local government. Little use will have more resources if provincial public sectors repeat the wastage incurred by the federal government with the abundance caused by centralization, as the subsidies to unprofitable public companies.

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