Flat Tax: Economic Growth and Fairness for Argentina
[Position Paper]
Author: Marianela S. Mendoza
Directed by: Horacio Arana, José Cambareri, Federico N. Fernández, Marianela S. Mendoza
Published by: Fundación Internacional Bases, Consejo de Contribuyentes & We Are Innovation
As Argentina grapples with economic challenges such as high inflation, complex taxes, and tax evasion, Fundación Internacional Bases, Consejo de Contribuyentes Argentina, and Somos Innovación Global Network say it is time to seriously consider implementing a Flat Tax system.
What is a Flat Tax?
A Flat Tax system applies a single tax rate to all income levels. It aims to simplify the tax code, promote fairness, and stimulate economic growth.
Successful Examples Abroad
Countries such as Estonia, Lithuania, Hong Kong, Ukraine, and Latvia have implemented flat taxes with positive results:
- Estonia pioneered flat taxes in 1994. It experienced economic growth, increased foreign investment, and more efficient tax administration.
- Lithuania followed in its footsteps and saw a more dynamic business environment and a more robust economy.
- Hong Kong’s competitive flat tax attracts international companies and supports its status as a financial center.
- Ukraine and Latvia revitalized their post-Soviet economies with flat taxes, stabilizing their finances and attracting investment.
Benefits for Argentina
Based on these precedents, a flat tax could provide Argentina with the following benefits:
- Economic Stimulus: Lower taxes encourage more investment and job creation to boost growth.
- Reduced Evasion: A more straightforward and transparent system facilitates compliance and reduces evasion.
- Increased Collection: Tax collection increases through economic expansion and efficient administration.
- Fairness: Tax burdens are more evenly distributed with a simplified code.
The Time is Now
With careful implementation, a Flat Tax can set Argentina on a path of sustainable growth, equity, and greater prosperity. Together with complementary policies, it provides a way to transform our economy for the better.
