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Cristina Fernandez unleashes tax agency against opponents, claims The Economist

Thursday, July 19th 2012 - 22:36 UTC
Full article 28 comments
Martin del Potro paying for the sin of denying a victory photo at Casa Rosada Martin del Potro paying for the sin of denying a victory photo at Casa Rosada

Under the heading of “Knock, knock, the government unleashes the tax agency against its opponents” The Economist latest edition claims that President Cristina Fernandez is using the tax revenue office to hound its political enemies.

The piece mentions several recent episodes of such a policy, not only against big targets as the Clarin media group but also with the country’s outstanding tennis player and winner of the US Open, Martin del Potro.

The tennis star comes from a rural area where the president was unpopular and declined to share his victory in a picture with the Cristina Fernandez. Ever since then, AFIP (tax revenue office) “has been around” the player and his finances.

Follows the full article:

Argentina has few advocates of freedom of speech more vocal than its president, Cristina Fernández. “Anyone can say whatever they like without fear of repression,” she said in 2010, and called herself an “icon of where freedom of speech is exercised” because of the insults she had suffered. Indeed, Argentina has not jailed anyone for speaking out during her presidency. But she has often used other means to silence her critics.

The government’s most blatant move to limit speech took place last year. Since 2007 it has doctored its inflation statistics to keep them below the true rate. That led investors, firms and journalists to consult private economists, who publish their own consumer-price indices.

Mrs Fernández tolerated this for years. But once she began preparing for her re-election effort, her officials cracked down. Using a truth-in-advertising law passed in 1983 by a military dictatorship, they levied $123,000 fines on ten economists for purportedly misleading consumers.

The other weapon the government has deployed against detractors is AFIP, the national tax agency. Argentina is rife with evasion—30-40% of the economy is informal—and AFIP cannot hope to pursue most of the country’s cheats. But ever since Ms Fernández named Ricardo Echegaray as its head in 2008, the opposition has accused the agency of devoting an outsized share of its scarce resources to her critics.

The best-known case of apparent abuse of AFIP occurred in 2009, when Clarín, Argentina’s bestselling newspaper, ran a story on irregularities in public farm subsidies. A few hours later, 200 tax agents showed up at Clarín’s headquarters. They conducted an extensive search, but the paper was never accused of evasion.

AFIP has also occupied itself with smaller fish. In 2009 Ms Fernández invited Juan Martín del Potro, a tennis player, to meet her after he won the US Open. Mr del Potro, who comes from a rural area where the president was unpopular, declined. Ever since then, says Rafael Groppo, Mr del Potro’s manager, AFIP “has been around” the star—again without finding anything amiss. Roberto Cachanosky, an economist, says he has been audited in four of the past five years, and has been asked to correct a total of $160 of expenses. On March 3rd, he says—the day an article of his criticizing the president was published—an AFIP employee hand-delivered an audit notice to him that was dated three months earlier.

The government has scrupulously denied any ulterior motive behind AFIP’s investigations. But on July 11th Ms Fernández herself revealed political meddling. In a widely broadcast speech, she mentioned an estate agent who had been quoted in a newspaper saying that the government’s currency controls had frozen the Buenos Aires housing market. The president then said she had asked Mr Echegaray to review the tax records of the man’s employer. The company had not filed a return since 2007, and AFIP promptly shut it down.

Meanwhile, AFIP may start to go easy on firms favored by the president. In February it began proceedings to claim a big back-tax bill from YPF, an oil company controlled by Spain’s Repsol. However, the government announced in April that it would nationalize YPF. Since then, five of AFIP’s top investigators have been removed from the case, prompting speculation that it may be dropped or buried. Ms Fernández seems to be taking a lesson from Óscar Benavides, a former Peruvian president. “For my friends, anything,” he once said, “For my enemies, the law”.

Categories: Economy, Politics, Argentina.

Top Comments

Disclaimer & comment rules
  • briton

    like the picture says,

    perhaps this guy is swatting for the wrong side .

    president, Cristina Fernández.
    “she called herself an “icon ?/

    That right,
    I conn everyone ,,in her own words lol.

    Jul 19th, 2012 - 10:52 pm 0
  • toxictaxitrader

    what is it about Argentinians,and their politicians that they cannot endure criticism ,in Ireland and the west,criticism is used as a tool to help us improve but Argentinian arrogance precludes this,if you chip away at democracy how long will it last,how long to the next Junta?

    Jul 19th, 2012 - 11:20 pm 0
  • Pirat-Hunter

    Seems like at least two bloggers here didn't read the middle of the report. “Argentina is rife with evasion—30-40% of the economy is informal—and AFIP cannot hope to pursue most of the country’s cheats.”
    It's about time the tax office started to make itself present, all Argentine's hope for more headlines like thisone.

    Jul 19th, 2012 - 11:56 pm 0
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