Tax Revenues in Mendoza Declined Compared to Inflation: Detailed Figures

The provincial government of Mendoza, Argentina, shared the revenue budget balance for the first half of the year with the public. According to official statements, the province reported a total revenue of 2.392.491 million pesos from both national and local sources. However, despite these high nominal figures, the economic outlook is not very promising. When the inflation factor is considered and the figures are adjusted to their real values, it is seen that the total revenues contracted by 2,2 percent compared to the same period of the previous year. This situation reveals the devastating effects of inflationary pressures on the regional economy. Officials have taken a detailed look at the revenue items to understand the main reasons behind this decline.

According to the data presented by the Ministry of Treasury and Finance, there was a significant drop in national-origin revenues, which constitute the largest slice of the total pie. The aforementioned national transfer revenues realized at the level of 1.412.697 million pesos, recording a real contraction of 3,2 percent. The main reason for this withdrawal was announced as the exceptional and quite high comparison base left by the year 2025. It was noted that the tax amnesties (moratorium) and capital declaration implemented last year created a temporary and extraordinary surge in revenue. Additionally, a significant drop was observed in customs Value Added Tax (VAT) collections due to the appreciation of the exchange rate. In contrast, some changes in legislation created extraordinary revenues in May, leading to a limited increase in Income Tax.

When looking at Mendoza's own local revenue sources, the picture is a bit more complex. The total revenue obtained by the province from local taxes and fees reached 979.794 million pesos. When adjusted for inflation, this figure indicates a very slight but still real decrease of 0,6 percent. However, the internal performance of local taxes followed a quite heterogeneous course; while some items grew above expectations, others faced serious contractions. This diversity reflects the transformation of different sectors in the provincial economy and the specific impacts of the general economic contraction. Government officials state that they are focusing on various fiscal strategies to balance this complex picture.

The Business Tax (Ingresos Brutos), which acts as the biggest engine among local tax items, managed to achieve a real growth of 1,9 percent. This positive performance was mainly achieved thanks to the vitality in financial institutions and the banking sector, and it managed to offset the declines in other sectors. The Property Tax (Impuesto Inmobiliario) also showed a remarkable increase of 5,6 percent; this increase occurred as a direct result of the new calculation methodology applied regarding the zoning and valuation of real estate. On the other hand, the Motor Vehicle Tax experienced a contraction of 5,1 percent. This decline was explained by the direct reduction of the tax base due to the general downward trend in vehicle prices.

One of the items that took the hardest hit in the context of local revenues was the Stamp Tax (Sellos). According to the official statements of the government, a very serious retracement (decline) of 12,4 percent was recorded in this tax collected from contracts and transactions. The main reason for this sharp decline was shown to be the gradual tax rate reduction policy consciously implemented by the provincial administration. Finally, according to the information in the continuation of the news, officials will also focus on the hydrocarbon sector and the royalty revenues obtained from this field. Hydrocarbon revenues are of critical importance for energy-producing provinces like Mendoza. In the upcoming period, how possible changes in these items will affect the general fiscal balance of the province is being closely monitored by economic observers.