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Cablegate: Argentina's Buenos Aires Province Taxman: Public Profile,

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #1426/01 2911230
ZNR UUUUU ZZH
R 171230Z OCT 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 2259
RUCNMER/MERCOSUR COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS BUENOS AIRES 001426

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EFIN ECON EINV PREL PGOV AR
SUBJECT: Argentina's Buenos Aires Province Taxman: Public Profile,
Political Ambitions

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Summary
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1. (SBU) Santiago Montoya, tax chief of Buenos Aries province,
Argentina's largest, is riding a wave of popularity following
high-profile tax compliance sweeps of wealthy neighborhoods. This
popular support, he told Ambassador, demolishes the Argentine
political truism that zealous tax enforcement is a vote losing
proposition. Argentina's cut-off from international borrowing
following the 2001/2 economic crisis did some good, he said, in
forcing the GoA to turn inward and focus on generating internal tax
revenues to sustain the state. But Montoya called for the Argentine
state to move beyond a narrow focus on maximizing revenue collection
towards a broader effort to foster credible state institutions that
can underpin society's acceptance of a culture of tax compliance.
On Argentina's political culture, Montoya dismissed the opposition
as hopelessly disorganized. He will be traveling to Washington
October 22-24 to attend an IDB-sponsored Latin American tax policy
forum. During that time he hopes to meet and establish ties with
senior US IRS officials. Montoya admires the pragmatism of U.S tax
collection models and said he is eager to adapt workable U.S. tax
mechanisms to his province's specific needs. End Summary
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Tax Populism in Buenos Aires Province
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2. (U) Santiago Montoya, Executive Director of the Province of
Buenos Aires' tax authority ARBA (Agencia de Recaudacion de la
Provincia de Buenos Aires) and his brother/chief of staff Daniel
Montoya met with Ambassador October 14. ARBA is an autonomous
provincial agency created December 2007 to manage Province of Buenos
Aires fiscal policy and consolidate tax and revenue functions
previously controlled by the provincial Secretariat of Revenues.
ARBA was structured to function with greater autonomy, operational
and technical capabilities that its pre-cursor provincial tax
collection entity.

3. (SBU) Discussion focused on a recent editorial Montoya placed in
Argentina's daily of record La Nacion that detailed his view that
the Argentine state needs to move beyond its narrow focus on
maximizing revenue collection towards a broader effort to foster
credible state institutions that can underpin society's acceptance
of a culture of tax compliance. Such a shift in federal and
provincial government focus, he said, is a necessary pre-condition
for citizens to support a progressive tax regime and an enforcement
system that can successfully "whiten" Argentina's large informal
economy and allow organizations like ARBA to target blatant tax and
IPR abuses like the informal La Salada market.

4. (SBU) Montoya argued that popular support for his tax compliance
sweeps of wealthy private neighborhoods demolishes former provincial
governor Felipe Sola's political truism that zealous tax enforcement
is a surefire vote losing ("pincha votos") proposition. "People
really want a more ordered society and my (tax collection) campaign
has united people. ARBA is doing no more than applying the law," he
said. In this context, Montoya noted the silver lining of
Argentina's 2001/2 default was that the disappearance of new foreign
funds to sustain government spending. This forced the GoA to turn
inward, focus on generating internal tax revenues to sustain the
state and so turn its attention to improving tax compliance and
collection.

5. (SBU) In response to the Ambassador's question on the GoA's
confrontation with the agricultural sector and failed effort to
legislate variable commodity export tariffs, Montoya called the
Kirchner administration's intransigent stance a major political and
economic error. He said he had told his friend and former colleague
Interior Minister Randazzo that the additional +/- US$ 800 million
(0.4% of GDP) that the GoA was looking to collect via higher export
tariffs could have been obtained at far less political cost by
focusing GoA energies on normal tax collections and on building a
tax compliance culture.

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Montoya's Political Philosophy
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6. (SBU) Montoya acknowledged that the popularity and media
attention paid to his tax collection campaigns have raised his
public profile ("People want their pictures taken with me - that's
never happened to a provincial tax collector before!"). In
response, opposition provincial parliamentarians have attempted to
blunt his efforts, Montoya said, by presenting a bill to repeal
and/or limit some of ARBA's special powers to attach taxpayer bank
accounts and assets without a prior judicial order. And
"troublesome" unions within Montoya's own ABRA organization have
accused him of "taking orders from Washington" because of his prior
work under the (Washington-consensus-oriented) Economy Minister
Domingo Cavallo in the 1990s.

7. (SBU) Turning to Argentina's political culture, Montoya (who
according to media reports has recently formally joined the Peronist
party) dismissed the opposition as hopelessly disorganized. He
rejected Buenos Aires City mayor Maurico Macri's "anti-progressive"
stance, and called Elis Carrio "simply out of control." For
Argentina to evolve beyond its currently fractious and enervating
political dynamic, Montoya concluded, it will be necessary to
establish a "Second Argentine Republic" on France's post World War
II model to build a new national consensus on a supporting and
sustaining a norm- and rule-bound society.

--------------------------------------------- --
Seeks Meeting/Cooperation with US IRS Officials
--------------------------------------------- --

8. (SBU) Montoya noted he will be traveling to Washington October
22-24 to attend an IDB-sponsored Latin American tax policy forum.
During that time he hopes to meet and establish ties with senior US
IRS officials and asked for Embassy assistance in identifying
appropriate IRS interlocutors (Embassy passed on this request to
U.S. Treasury Western Hemisphere officers). Montoya said he admired
the pragmatism of U.S tax collection and anti-trust enforcement
models and said he is eager to adapt workable U.S. revenue
collection models to his province's specific needs. ARBA will adopt
and adapt whatever revenue collection models work, he said,
recalling that had earlier signed cooperation agreements with French
tax authorities in 2005 (when Felipe Sola was provincial governor)as
well as with tax authorities of Italy and Spain. He said he had
traveled to Chile to study and copy their system which allows tax
authorities to impound goods being transported without proof of
required tax payments. And he said he has copied Canada's tax and
regulatory system on burgeoning call center operations in the
province. "Whatever collection systems work well will work for us,"
he concluded.

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Bio Data: Santiago Montoya
--------------------------

9. (SBU) Santiago Montoya is the Executive Director of ARBA (Agencia
de Recaudacisn de la Provincia de Buenos Aires, the tax collection
agency of the province) since its creation in December 2007. Prior
to that, he served as Undersecretary of Public Revenues of the
Province of Buenos Aires (2001-2007), advisor to the provincial
Ministry of Production and Economy (2000-2001), and as consultant to
various international organizations, including the IDB, World Bank,
and Japan Eximbank. Montoya also worked for federal GoA
institutions including the Secretary of the Treasury of the Republic
of Argentina, the office of the Chief of Cabinet, and of the General
Coordinator of the DGI (Direccion General Impositiva, equivalent to
the U.S. IRS) as well as private companies. From 1991 to 1993, he
worked as Director of the IERAL-Fundacion Mediterranea (highly
regarded economic think tank) magazine, then managed by former
Economy Minister Domingo Cavallo. Montoya is a classic car
aficionado and owns a 1959 Impala ("with fins!") which he proudly
exhibits. Montoya is originally from Cordoba and holds a business
administration and accountancy degree from the Universidad Nacional
de Cordoba.

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Comment
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10. (SBU) Montoya appear a well read, thoughtful, media savvy, and
politically ambitious player in Governor Scioli's Province of Buenos
Aires administration. In light of his recent formal affiliation
with the Peronist party, recent media reports speculate that Montoya
may run as a Lower House federal or provincial Diputado in 2009
interim elections. Other Embassy contacts in the federal government
speculate that Montoya would be more interested in building his tax
compliance profile further by moving up to run the national (AFIP)
tax administration. Montoya himself noted that Cabinet Chief Massa
and Interior Minister Randazzo have asked him to think about moving
to the federal government.

WAYNE

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