Thursday , October 6 2022

They point out that informality in small and medium-sized businesses has increased due to high financial costs and tax pressure


President of the Industrial Pymes Argentinos (IPA), Daniel Rosato, which was alerted to the excessive growth of the informal market among manufacturers the direct consequence of employment in this sector and blamed the harmful effect of a combination of a financial policy that uses high interest rates and a record tax pressure that leads to competitiveness in domestic products.

"The amount of unregistered transactions has grown shockingly because financial costs have forced many companies to do business only in cash to avoid price hikes and do not have to change controls that create losses that are out of logic," he regretted. Rosato.

The industrial link pointed out that the decision of "many small and medium-sized enterprises" to run part of their production beyond the formalities causes considerable losses to the Treasury and worsens the competitiveness of a registered company that "faces daily the payment of all obligations as part of the system" which are associated with the IPA.

In this sense, Rosato criticized unregistered sales, even though he was trying to explain that the introduction of informality on the commercial market "responds to the problems caused by the recession crisis, the lethal reduction in domestic consumption, the higher costs set by the rise in energy prices and the devaluation that has disturbed the entry market."

"Lack of funding and strong tax pressure, coupled with the adoption of SMEs to make a painful decision: become informal. No one who has achieved recognition in a virtuous business cycle wants to leave this situation but the only way to avoid an increase and the ability to buy back without price uncertainty is cash because banks currently have the minimum profit margins they are currently using, "Rosato complained.

The calculation made by the Instrument for Pre-Accession shows that informality has a 20% impact on the average price of its products. These offers have been converted into informal markets such as fairs and even commercial premises offering lower prices as they sell part of their sales in black.

"Economic policy mechanisms strengthen and strengthen the black market, as interest rates are high and debit control is costly, producers and traders leave the formal trading market for cash because of the loss of competitiveness, is generated in the financial sector," Rosato said.

IPA president said he was found "transition from formal to informal market that has been recorded with greater emphasis in the interior of the country" and while he understood the reasons that led companies to avoid formalities, he regretted that "the logic of the inequality in competitiveness between those companies that remain in the tax system against those who have decided to move to informality to have the minuscule costs."

"It is vital for the national government to take this situation into account and to put in place a comprehensive plan for industrial SMEs that anticipates a fall in interest rates, financial instruments to support domestic production and to restore the domestic market, thus preventing informal societies from nowadays it is shifting to an increase in unregistered work because it assumes a future that will be increasingly fragile for all Argentina, "Rosato said.

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