Buenos Aires, like Washington, is bothered by tantalizing hints of funds yet untaxed. Unlike Washington, they have a Plan, kinda sorta:
President Cristina Fernandez de Kirchner wants tax evaders hiding about $160 billion in dollars to help finance Argentina’s oil-producing ambitions. Her offer: Buy a 4 percent bond or face the prospect of jail time.
The tax authority announced the plan May 7, highlighting its information-sharing agreements with 40 nations and warning Argentines who don’t use the three-month amnesty window that they risk fines or arrest. Evaders have two options for their cash and the only one paying interest will be a dollar bond due in 2016 to finance YPF SA, the state oil company. The 4 percent rate is a third the average 13.85 yield on Argentine debt and less than the 4.6 percent in emerging markets.
This is not, incidentally, the first time the Argentine government has gone after those wicked rich people:
Many Argentines hide assets to avoid a 35 percent income tax and a levy of as much as 1.25 percent on their personal wealth. Undeclared assets are also beyond the reach of the government, which in 1989 seized bank certificates of deposit in exchange for bonds and in 2002 converted dollar deposits into pesos.
Incidentally, if you didn’t know Argentina had a state oil company these days, that’s also a Fernandez scheme, as is fining economists who suggest that the inflation rate, claimed by Buenos Aires to be 10 percent, is actually more than twice that.
Fortunately, the US has unofficial inflation statistics, far more believable than the government’s official bumfuzzlery.