Following the announcement by the Government that registrations for foreign sales of soybean meal and oil were suspended, rumors that there was a further increase in withholding from the agro-industrial sector are becoming more present and could be confirmed in the coming hours.
Despite what is stipulated by our Magna Carta, so far the Executive Branch has used legal tools that enable it to establish withholding on grain exports. One of them, the Public Emergency Law passed in 2019, lost effect on December 31, 2021. However, in accordance with the Customs Code, the Executive is currently delegated the power to establish, by itself, essential elements for export duties.
For this reason, a few weeks ago we introduced a bill to repeal Articles 664, 755 and 756 of the Customs Code, which so far give the Executive Power the power to assume functions that, according to the Constitution, are proper and non-delegable to the Congress of the Nation. Through this initiative, any type of legal justification that may be invoked by the Executive Branch to support the fixing of these taxes would be cleared, leaving no doubt that such power is the power of Congress.
In this way, Casa Rosada has been using a legal tool that is contrary to what is established in our Constitution, which results not only in the violation of the division of powers and the functions of the legislative branch, but also ends up causing severe distortion for agricultural producers.
Withholdings are an indirect tax on foreign sales. For this reason, the Executive Branch cannot fix them. To do so, we need a special, autonomous law that creates and fixes withholdings. A law that clearly establishes the essential elements of said tax, making clear the taxable event, the subject who will be obliged to pay it, the rate, among others. In this way, the Executive Power is empowered to send to Congress a special and autonomous bill on this matter, which must be debated and, ultimately, approved by the National Congress. But what he should not continue to do is to set this tax by decree. In disagreement with a bill presented by my colleagues Ricardo Buryaile and Pablo Torello, neither should a law establish the duty of the Executive to propose tariff positions alongside the draft budget law.
In addition, we must bear in mind the situation that our producers are going through. For the Liaison Commission of Agricultural Entities, which brings together the Agricultural Intercooperative Confederation (CONINAGRO), “this type of rigid tax puts many producers in check who do not yet know if they will save the costs”.
We are faced with a situation in which there is a tax distortion, since the application of a uniform rate without taking into account the contributory capacity of each producer, represents a factor of regression, which does not recognize inequalities and is taxed on the export of each producer equally, no matter what they are, by for example, the costs of production and marketing, violating the principle of contributory capacity of each producer and which must govern when applying a tax.
In this way, the current application of withholdings presents double inequity. First, the one already mentioned that taxes on the selling price and not on profit. The second is linked to geography, since production that is close to the centers of consumption or export sites is taxed in the same way as to production that is located at great distances from them, further eroding economic activity in the interior of our country.
Therefore, having lost force of the Public Emergency Law and the failure to approve the draft Budget Law for the year 2022, the latter legal tool must be stripped of the Executive Branch. In this way, it will be possible to promote and advance towards proper compliance with the Constitution, democratic institutions and joint work that brings closer and provides solutions to the agricultural sector, a fundamental pillar in our country.
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