Saturday , October 23 2021

They warn that informality has grown in SMEs due to high financial costs and tax pressures



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President of the Pymes Argentinos (IPA) Industry, Daniel Rosato, alerted to the excessive growth of the informal market among manufacturers, with direct consequences in the work of the sector, and blaming the harmful effects that result in personal activities a combination of financial policies that apply high interest rates and record tax pressures that eliminate the competitiveness of domestic products.

"The number of unregistered transactions grew in a surprising way, because financial costs forced many companies to do business only with cash to avoid highlighting prices and not having to change checks that resulted in unreasonable losses," he complained. Rosato.

Industry references warn that the decision of "many SMEs" to operate part of their production beyond formalities results in significant losses to the treasury and places in competitive weakness for companies that are registered "face daily to pay all obligations because they are part of the system", such as those occurs in relation to science.

In this sense, Rosato criticized unregistered sales, although he tried to explain that the installation of informality in the commercial market "responds to problems caused by the crisis of recession, with lethal reductions in domestic consumption, higher costs determined by rising energy prices and devaluations which distorts the input market ".

"Lack of financing and strong tax pressure combined to bring SMEs to painful decisions: being informal. No one reaches a situation of recognition in virtuous economic circles wanting to leave the situation, but the only way to avoid increasing and being able to repurchase inventory without price uncertainty is with cash because banks are left with a minimum profitability margin with those currently operating, "complained Rosato.

Calculations made by IPA show that informality benefits producers with an average reduction of 20% in the price of their products. This offer is transferred to informal markets such as exhibitions and even commercial areas that offer lower prices because they sell a portion of their sales in black.

"The mechanism of the strength of economic policy and strengthening the black market, due to high interest rates and expensive cash checks, producers and traders leave the formal market to trade in cash because of the loss of competitiveness that is generated in the financial sector," Rosato said.

The IPA president said that it was detected "transfers from formal to informal markets, which are recorded with more emphasis in the interior of the country", and although he understood the reasons that caused the company to avoid formalities, he regretted that "the logic of disloyalty in the competitiveness of companies that remain in the tax system towards those who decide to move to informality to have underage children costs."

"It is important that the national government considers this situation and places a comprehensive plan for industrial SMEs that contemplate the reduction of interest rates, financial instruments to encourage domestic production and strengthen the domestic market, and thus avoid that corporate informality moves, as is the case today, in the increase in unregistered work, because it presupposes an increasingly fragile future for all Argentines, "Rosato stressed.

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