Politics in Argentina-Knock, Knock

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Politics in Argentina

Knock, knock

The government unleashes the tax agency against its opponents

Jul 21st 2012 | BUENOS AIRES


ARGENTINA has few advocates of freedom of speech more vocal than its president, Cristina Fernández de Kirchner. “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.


Ms 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 criticising 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 favoured 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 nationalise 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.”


Source: www.economist.com