Why Argentina’s struggling construction sector isn’t applauding planned tax cuts

A tax cut plan announced by the Argentine government will be of little relief for the country’s embattled construction sector due to lack of works, according to the head of Tucumán province’s construction chamber (CCT), Jorge Garber.

“It would be hard to understand how lower taxes would help us because at the end of the day if I report zero income I pay zero taxes,” Garber told BNamericas, adding that some firms have not reported sales for up to nine months.

The government aims to have made cuts to 90% of the country's taxes by the end of the current term, economy minister Luis Caputo said at the opening of the annual convention of the country’s construction chamber (Camarco).

Tax cuts are welcome in terms of boosting economic activity, but their potential impact is questionable due to the dire situation of the construction sector and the economy, said Garber.

The decision by President Javier Milei to halt federal funding for public works exacerbated a crisis in the construction sector by paralyzing thousands of projects.

This policy has led to the loss of 100,000 direct jobs, according to Camarco president Gustavo Weiss.

At the convention, Weiss said the government has a debt with contractors worth 400 billion pesos (US$439 million) that corresponds to works executed in the months before Milei took office in December.

When talking to BNamericas, Garber said the number may be higher since Weiss’ calculations are not adjusted for inflation. “That’s something that I believe the government doesn’t want to deal with yet because they know it’s quite large and will require special engineering to a certain extent to pull that off.”

Provincial governors have wrestled with Milei’s administration to at least resume funding for projects that are close to completion and those considered strategic for the provinces. Some agreements have been signed to resume certain works, while other projects will be transferred from federal hands to provincial administrations.

In Tucumán’s case, CCT and the provincial government have been working on a PPP system to resume road and housing projects. They are also waiting for a decision by the federal administration regarding the potential adoption of a PPP framework, Garber said.