September tax collection remains up-beat, despite mild softening in growth

ARGENTINA - In Brief 03 Oct 2017 by Esteban Fernandez Medrano
In September, total tax collection reached AR$1.9bn, growing 33.1%y/y, quite in line with the accumulated yearly growth (Jan to Sep) of 31.4%y/y. Although the annual rate declined somewhat with respect to the 33.5%y/y observed in f August, it still remains significantly stronger than inflation and a positive sign for domestic activity. Inflation-adjusted, activity linked tax collection maintained a 8.0%y/y real growth rate, after smoothing the time series with a 3 month moving average. Similarly to the behavior of the nominal tax data, the unadjusted activity index grew 5.5%y/y in September, down from the 11.2% of August. Despite the decline in the annual growth rate of it remains a strong lead for Q4 GDP growth. Interesting to point out is that internal Income tax (DGI) grew 52%y/y, suggesting that the recovery is “maturing” into profits and is not just driven by VAT, as it has the previous months. Indeed, September VAT grew “just” 27.1%y/y. Yet still more than inflation which should close around 23.4%y/y.

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