Taxes: Who Gained and Who Lost from the Changes Implemented by Javier Milei

President Javier Milei's claim of having reduced taxes by an equivalent of 3% of GDP is true, although the return of resources to the private sector has not been uniform for all, according to a private study. While workers and consumers faced a tax increase of 1.51% of GDP, investors, companies, and high and upper-middle-class sectors benefited from a reduction of 4.48%.

This conclusion is drawn from a recent study conducted by the Argentine Institute of Fiscal Analysis (IARAF) on the changes and evolution of taxes in Argentina since the libertarian government began.

The report indicates that the most significant drop in resources since the new administration arrived at the Casa Rosada in December 2023 is explained by the expiration of the PAIS Tax, which ended by law in December 2024. During its first year in office, the nascent government raised it by the equivalent of 0.3 percentage points of GDP. Then in 2025 and 2026, it relinquished 1.10 percentage points of GDP each year. The net result is a decrease of 1.9 percentage points.

It could be said that this tax affected all segments of society since it was levied on the sale of dollars, whether to leave the country, to save (with limitations), to import, or to pay services abroad, such as streaming platforms. However, regarding internal consumption, such as food, construction materials, and others, the impact was indirect, focused on the cost of companies for some foreign-sourced inputs.

That is to say, 43% of the tax revenue loss from the PAIS Tax was due to the Government's decision not to extend it. The tax was considered highly distorting, created during Alberto Fernández's government to discourage the public from buying dollars while trying to maintain strict control over the currency market.

Which Taxes Increased

The tax that has increased the most so far, as a proportion of GDP, is the one levied on fuel transfers. This has been the center of recent controversy because, although it continues to be collected, it has a specific allocation, which is road maintenance, and it is not being executed, opposition legislators claim. The tax increased its collection by 0.83% of GDP. The increase is due to inflation adjustments. During Alberto Fernández's administration, adjustments were postponed to avoid feeding the inflationary process.

Next in line is the Income Tax. This has some internal rebalancing because the current government restored the tax for higher salaries. It is estimated that 800,000 people who had stopped paying it due to Alberto Fernández's reform were reincorporated by Milei. However, on the other hand, this year, with the labor reform, a reduction of rates for companies was approved. For those at 30%, it dropped to 27%, and for those at 35%, to 31.5%. Ultimately, the tax increased by a quarter of a percentage point of GDP in 2025 and another 0.29 points in 2026, with a total increase of 0.54 points, mostly attributable to employee contributions.

The third tax that has increased in recent years is the monotributo, something that was expected to happen, as what taxpayers in the simplified regime were paying before the last reform was very little. In 2025, its collection grew by 0.07%, and in 2026, another 0.07%, totaling 0.14 points.
Changes in Income and Fuel Taxes do not compensate for the loss of resources caused by the end of the PAIS Tax and the reductions in Withholdings and Personal Property Taxes.

Taxes that Decreased

Among the taxes that lost revenue are the PAIS tax, which would explain 43% of the decline, followed by export duties and Personal Property Taxes, with 19% and 18% respectively, and VAT, with 11%, among the most significant. In this sense, according to the study, in three years, the government relinquished resources from the PAIS Tax of 1.9; Personal Property, 0.78; withholdings, 0.87; import tariffs, 0.1; fuel transfer tax, 0.03; shared internal taxes, 0.24; and VAT, 0.5%, related to the suspension of customs exclusion certificates, as there was no reduction in the rate, which remains at 21%.

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