Symposium paper: Progressive taxation in the face of inflation and instability: Lessons from Argentina

As inequality has risen around the world, the importance of tax design for achieving equity objectives has become increasingly widely discussed and is the focus of much recent public finance research. At the same time, globalisation and the increasing international mobility of capital have brought international and jurisdictional issues in tax policy to the fore for many countries and for the international community more generally.

This set of issues was showcased at the 4th World Bank Tax Conference in September 2022, which focused on ‘Global Tax Equity’. The set of perspectives papers in this symposium showcases some of the key policy questions and discussions from that meeting of academic researchers, tax and development practitioners and policymakers. 

The article ‘Progressive taxation in the face of inflation and instability: lessons from Argentina’ by Roberto Arias and Vedanth Nair discusses the Argentinian experience of an annual wealth tax, to demonstrate that efforts to improve tax equity along the lines suggested by Zucman in his paper based on his conference keynote can be hampered by inflation and instability in low- and middle-income countries. While unanticipated inflation episodes have rendered the tax system less progressive, policy actions have recently been taken to retain progressivity – for example, by indexing bracket thresholds and fixing the share of the population liable for personal income tax. Picking up on one of the themes of Zucman’s, Arias and Nair point out that Argentina has also embraced the recent progress in international tax cooperation and hopes to increase revenue collections as a result.