Deposit withdrawal intensifies on wrong official remark

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After Argentine cabinet chief Alberto Fernandez talked about a potential tax on financial income, jitters increased among small-sized savers. Due to farm clash, nowadays everybody doubts whether to renew a time deposit or not. The issue is even further analysed if threats arise of Income Tax on interests. The aide denied such duty yesterday. Too late.

Argentine administration will wait till solving clash with farm to boost a new tax on financial income. However, it won't affect time deposits. To be precise, the executive is thinking of a tax levying profits coming from sale of corporate stocks among private individuals, as well as other specific transactions outside the financial system.

Argentine cabinet chief Alberto Fernandez stated on Thursday that government was not planning to discuss this alternative in the short term, rather that it was an issue to "debate in the future." "We'll have to see when it's the right moment and the appropriate conditions. Nobody is dealing with this issue now," he added.

Programs under analysis in economy ministry focus on purchase and sale of corporate stocks without public quote, on some movements within trusts and on sale of stocks and bonds starting from a particular amount.

What's not under discussion in government is some kind of tax on financial income arising from time deposit placement and other sort of transactions by the public within the financial system.

Cabinet chief said yesterday that current administration was not planning to touch citizens' "savings" by applying an Income Tax on financial revenue. Neither government is thinking of making progress in tax on debits and bank credits.

The program about Income Tax for sale of corporate stocks would start being designed next June; and if official estimates work, it may be sent to Congress before 2009 budget bill. Moreover, as it is a portion of income tax, national government will have to share it with provinces.

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