------------------ ESP

Petition to the Supreme Court

The BCRA has requested the Argentine Supreme Court of Justice to declare the unconstitutionality of the laws enacted by the Autonomous City of Buenos Aires that levy gross income tax on sovereign bonds and transactions regulated by the BCRA.

The petition involves those sections of the 2021 Tax Law and the 2021 Budget Law that impose gross income tax on repo transactions, underlying assets or collateral, transactions with securities, bonds, bills, certificates of participation, and other instruments already issued or to be issued by the BCRA.

In fact, the BCRA challenges the constitutionality of these laws on the grounds that they affect monetary policy, which is to be conducted by the BCRA, as expressly provided for in the National Constitution.

The BCRA has requested the Court to declare the immediate suspension of such provisions, and to order the Government of the City of Buenos Aires to refrain from taking any action aimed at enforcing such tax, until a final, unappealable judgement be entered.

In addition, the BCRA states that “issues of major institutional importance are at stake”, given that “the taxation of transactions and instruments inherent to monetary policy severely undermines or may seriously affect the economy as a whole.”

The laws passed by the Government of the City of Buenos Aires impose a tax on transactions that have a direct impact on monetary policy, which is to be conducted by the BCRA in accordance with the National Constitution, Article 75(6) and (11). Therefore, the laws of the City of Buenos Aires “are in conflict with the federal law and the National Constitution.”

“The Law on Financial Institutions and the BCRA’s Charter are in line with the provisions of Article 75 of the National Constitution. Hence, local laws cannot interfere with the missions and duties of the BCRA (in its role as federal bank, Article 75(6), National Constitution), which is also responsible for coining money, regulating its value and that of foreign currency; and for adopting a uniform standard of weights and measures for the whole Nation (Article 75(11), National Constitution).”

“In view of the foregoing, by imposing a tax on securities and transactions regulated by the BCRA, the Government of the City of Buenos Aires arrogates unto itself powers on financial matters that directly affect the monetary system,” argued the BCRA. All in all, the BCRA has requested the Supreme Court to entertain the dispute regarding the construal of the federal law involved, which is being hampered by the actions of the Government of the City of Buenos Aires.

December 11, 2020.

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