President Javier Milei likes to rile up crowds in Argentina and abroad by quipping “taxes are robbery and I’m saying that as the head of state.” Yet the libertarian’s tax authorities were actually pressuring so many small businesses to pay up that it boiled over into a political problem.
Aggressive enforcement tactics have fuelled anger among shopkeepers and small-business owners, including many who voted for Milei hoping he would lower taxes and get the state off their backs. Some are now reconsidering their support ahead of next year’s presidential election – a warning sign that prompted his government to ease off.
Measures including bank-account freezes, liens and restrictions on asset sales jumped 52 percent so far this year through August from a year earlier, totaling some 135,744 instances, according to Argentine media outlet Todo Noticias, which cited a public-information request filed with tax authority ARCA. On Tuesday, Economy Minister Luis Caputo announced that ARCA would suspend bank-account freezes for small businesses until at least May and extend tax repayment plans.
The reversal offers some relief to voters like Vanesa Camiscia, who cast her ballot for Milei three years ago. But it’s hardly what she envisioned when the outsider politician took office promising to slash taxes and red tape.
Camiscia, 38, runs a wholesale produce stand at the bustling Mercado Abasto de Quilmes in Buenos Aires. ARCA froze her company’s bank account after she fell behind on a repayment plan, forcing her to choose between paying suppliers and keeping up with the taxman. The experience has made her rethink how she’ll vote in next year’s presidential election.
“I remember Milei telling us to get ready because we were going to make a fortune,” Camiscia said, adding she won’t vote for Milei next year nor his left-wing opponents. “Now this is humiliating. They’re suffocating small businesses.”
ARCA’s press office declined to comment.
Stricter tax payment plans have helped Milei preserve his hard-fought fiscal surplus, which in turn has tamed runaway inflation. After inheriting a deep deficit three years ago, Argentina’s primary fiscal surplus so far this year is equal to about 1.2 percent of gross domestic product, while inflation has cooled to 33 percent from above 200 percent in early 2024.
Milei also has support from Washington on the issue. The Inter-American Development Bank granted Argentina US$100 million in financing in April specifically to improve tax collection. At the same time, Argentina already has the second-highest tax burden of any Latin American country after Brazil, according to OECD data.
Tougher enforcement collided with an overvalued peso, persistently high taxes, prohibitive interest rates and fewer subsidies on transportation and utilities. That cocktail is driving operating costs up and consumer spending down.
Milei’s top senator, Patricia Bullrich, applauded the pause on account freezes or embargoes, but said more measures were needed to restart economic growth that’s stagnating. Bullrich, increasingly critical of the president amid speculation of her own run for the top office next year, said she had brought up the issue for a long time.
“Every business owner I talked to told us the same thing: Embargoes are killing companies,” Bullrich posted on X.
The mounting pressure showed up across the small-business sector. A survey by advocacy group Fundación Observatorio PyME found that 15 percent of Argentina’s small and medium-sized industrial firms have faced asset seizures or account freezes by ARCA over unpaid obligations. Seven in 10 of those companies received notices within 30 days of missing a payment.
“It’s a complaint I’ve been hearing increasingly for about a year,” Pablo Dragun, executive director of Observatorio PyME, said before the government lifted frozen accounts. “Before, ARCA didn’t move to seize assets so quickly, almost automatically, as it does now.”
Camiscia says her company, Vanano, was in talks with ARCA last year to enter a 60-installment payment plan after falling behind on taxes. ARCA froze the company’s bank account without prior notice, even though Camiscia believed she was still negotiating the payment plan. She’s stressed about how much longer she’ll keep her business operating.
“We go to work every day as if it were the last,” she said. “We don’t know how long it will be before we go under for good.”
Ahead of next year’s race, the open question is how much will Milei’s moves to achieve a fiscal surplus cost him at the ballot box in 2027, and whether the tax relief is too little too late. Argentina has lost over 32,000 private sector businesses and 265,000 formal jobs since he took office, according to government data.
“The government said the cost of disinflation would be temporary,” said Guido Zack, director of economics at Buenos Aires-based think tank Fundar. “But that cost has become permanent: inflation has stabilised, while costs have not eased.”
Committed to lower inflation and more austerity, Milei is struggling to spark the growth he promised voters. Argentina’s economy is expected to expand just 1.5 percent this year, below the five percent Milei had pledged in his annual budget forecast. The economy likely went into a technical recession in the third quarter too.
Most of the pain is felt in Argentina’s labour-intensive sectors like retail, construction and manufacturing.
Martín Blust saw domestic sales at his musical string business nosedive 40 percent since Milei took office. His 10-person family business, Cuerdas SRL, makes strings for guitars, basses, mandolins and other instruments. It exports roughly a quarter of its production to more than a dozen countries, but those markets haven’t offset the losses in Argentina.
After surviving many Argentine crises since its founding in 1952, Blust’s company stopped producing on Fridays to reduce labour costs. Excluding salaries and inputs, payroll taxes and social-security contributions alone Blust up to 30 percent of his revenue, twice as much before Milei took office, Blust says.
ARCA froze Cuerdas’s bank account after it missed several tax payments. Blust says his family-run business owes 55 million pesos (US$36,000), which includes debts to ARCA’s own lawyers that companies are obligated to pay. Any money deposited in the Cuerdas account got swallowed by the tax authority. It had forced him to ask suppliers not to cash checks while he tried to arrange payments another way. “Falling behind creates a huge mess – we’re not asking for the debt to be forgiven, we need more time,” Blust says.
He appreciates Milei unfreezing bank accounts but doubts it’ll change Argentina’s economic outlook.
“It’s a big help but the damage is already done, hundreds of companies closed due to the embargoes,” on accounts, he said, noting the fundamental challenge is a lack of economic growth. “It helps but it doesn’t even begin to solve the problem.”