savings

BUENOS AIRES, Jan. 2 (UPI) — Argentina’s government has enacted the so-called Fiscal Innocence Law, which changes tax evasion thresholds and seeks to encourage declaring and depositing undeclared U.S. dollar savings, commonly known locally as “dollars under the mattress,” into the formal financial system.

Official data show Argentines held about $254 billion outside the banking system as of September, slightly below the $256.5 billion reported at the end of 2023.

The phenomenon reflects decades of mistrust in the financial system after repeated economic crises, bank account freezes and successive currency devaluations. Under previous administrations, the volume of undeclared dollars grew sharply amid restrictions on access to the official foreign exchange market.

The initiative is part of President Javier Milei’s economic agenda. It aims to bring undeclared savings back into the formal economy, broaden the tax base and support economic activity.

The law introduces two main changes.

First, it seeks to protect taxpayers by shifting the legal standard from “guilty until proven innocent” to “innocent until proven guilty.”

Second, it simplifies the tax system by sharply raising the thresholds for pursuing tax evasion, which had not been updated for years. Simple tax evasion will now be investigated starting at $100,000, up from about $1,500, while aggravated tax evasion will apply from $1 million, compared with a previous threshold of about $15,000.

The reform also shortens the statute of limitations for tax crimes from five years to three. Taxpayers who receive a notice of irregularities will be able to normalize their situation by paying what they owe without facing criminal penalties.

The government stressed that the measure is not a tax amnesty, as individuals still must pay taxes owed on previously undeclared income.

“This law is probably one of the most important in Argentina’s recent history,” said Manuel Adorni, the government’s chief spokesman, during a press briefing. He said the reform overturns a legal paradigm in place for more than a century.

“Instead of being treated as suspects, all citizens are presumed innocent until the courts prove otherwise,” Adorni said.

He added that bringing these funds into the formal system could boost investment and deepen capital markets.

Private sector credit in Argentina currently amounts to about 9% of gross domestic product, well below the regional average, which ranges between 60% and 120%. The new law, Adorni said, creates an opportunity to channel savings into investment projects.

Economist Elena Alonso, co-founder and chief executive of Emerald Capital Global, told UPI the reform represents a profound shift in the relationship between the state and taxpayers.

“The core idea is to stop treating everyone as a suspect by default and move to a system where people are considered compliant unless the tax authority proves otherwise,” Alonso said.

Previously, she said, the system placed the burden on taxpayers to prove they had done nothing wrong even in the absence of evidence.

“This does not mean taxes will go unpaid or debts will be forgiven,” Alonso said. “It simply means wrongdoing must be proven first and only then can the state make a claim.”

She said the change would lead to more targeted requests for clarification, focused on proven cases rather than minor or formal errors.

For citizens, Alonso said, the benefits include greater predictability, less fear of administrative mistakes and a more balanced relationship with the state. “That also encourages compliance because the system feels fairer,” she said.

WASHINGTON — A bipartisan federal commission, in an unprecedented effort to save money and consolidate the nation’s sprawling complex of military bases, recommended Thursday that Defense Secretary Frank C. Carlucci shut 86 bases and partly close another five, yielding a savings of $700 million a year.

The commission called for six California bases to be closed, including the historic Presidio in San Francisco and two Air Force bases in San Bernardino County. It recommended also that the Navy halt construction of a new station at Hunters Point in San Francisco and that ships slated to have been based there be transferred instead to ports at San Diego, Long Beach and Pearl Harbor in Hawaii.

Cleanup Problems Seen

If approved by Carlucci and not overruled by Congress, the panel’s recommendations could move more than 17,000 Defense Department employees out of California and lead to the sale of thousands of acres of military warehouses and airfields–as well as environmental cleanup problems–to new owners in the private sector across the country.

Moreover, approval of the commission’s recommendations would mark the first time in a decade that the Defense Department has overcome political obstacles to base closures and shut any major military facility in the United States.

In presenting the report, former Rep. Jack Edwards (R-Ala.)–co-chairman of the 12-man President’s Commission on Base Realignment and Closure with former Sen. Abraham Ribicoff (D-Conn.)–called the report “a totally nonpartisan effort” and added that in reaching its conclusions, “we didn’t accept any list from anybody.”

The panel’s findings met mixed reaction on Capitol Hill, where several members of the California delegation complained that the state would be unfairly affected by the closures. But congressional leaders predicted that the recommendations would be implemented despite the objections.

Congress, which established the panel last May to hold down the rising cost of maintaining the nation’s military bases, will have 45 days from March 1 to reject the entire list by voting a measure of disapproval in both houses. A two-thirds’ vote is required. Unless it does so, the Defense Department is expected to move quickly to implement the commission’s recommendations, with official base closures beginning in January, 1990.

Won’t Give Up Fight

Representatives from hard-hit states, however, were not yet ready to give up their home-state military facilities without a fight. Illinois Democratic Sens. Alan J. Dixon and Paul Simon criticized the commission for not recommending closures of U.S. bases overseas.

“How can we justify closing military bases in our own back yard when we don’t even consider a single one of the 1,500 overseas U.S. military facilities?” Dixon asked.

Still, the vast majority of House members will support the base-closing recommendation, in large part because their districts are not affected, House Armed Services Committee Chairman Les Aspin (D-Wis.) said. Most of the 86 bases slated for closing have fewer than 30 employees, Aspin noted.

“We’re really talking about a universe of only 27 communities that will be hit markedly,” Aspin said. “I would say the chances of overturning this process are not high.”

In the Senate, Armed Services Committee Chairman Sam Nunn (D-Ga.) praised the commission for its “workman-like approach” to the task of closing unneeded bases and predicted that the recommendations will not be overturned by Congress.

Neither Aspin’s Wisconsin district nor Nunn’s home state of Georgia is affected by the base-closing plan, which would provide an estimated savings of $5.6 billion over 20 years.

Edwards defended the heavy hits against California bases–which represented a little more than 7% of the total closures–saying that the state’s high economic growth and its large military presence made it a likely site for some shutdowns.

“We found over 300,000 military and civilian people in California,” Edwards said. “When you’ve got that kind of activity in a state, it’s not unlikely that you’re going to have some activity on this committee on that state.”

New Hampshire, New Jersey and Illinois, states with a much smaller military presence than California, were hit hardest by the initiatives. With the closure of Pease Air Force Base, New Hampshire would lose almost half of its military population. With the proposed closure of Chanute Air Force Base and Ft. Sheridan in Illinois and Ft. Dix in New Jersey, those states’ military populations would be cut by 9.7%. By contrast, California would lose 5% of its military population.

Citing air traffic congestion and encroachment by the surrounding civilian communities, the commission recommended the closure of George Air Force Base and Norton Air Force Base in San Bernardino County.

March Would Grow

The move would draw 6,653 military and civilian workers from Norton and 5,358 from George. But March Air Force, 9 miles southeast of Riverside, would pick up an additional 3,420 military and civilian employees from proposed consolidations, many of them from Norton.

In both cases, the panel contended that the actions would have a “minimal impact on local employment,” though its members conceded that those affected by the recommendations might differ with that assessment. The commission noted that Norton and George have had trouble recruiting civilian workers from the local population because of competition from the high-technology private firms operating in and around the Apple Valley.

The closure of Norton could cost $132 million, according to commission estimates. But the panel believes that the move would save the Air Force $68 million annually in operating costs, yielding savings within three years. The closure of George, estimated to cost $37 million early in the process, would result in quicker returns because the Defense Department will save $70 million in operating costs once it is shut.

The panel urged also the closure of Mather Air Force Base, 12 miles southeast of Sacramento, a move that would take away about 3,000 military and civilian employees and a payroll of $242.3 million.

The Pentagon tried unsuccessfully to shut Mather in January, 1987, but was prevented by Reps. Robert T. Matsui and Vic Fazio, both Democrats from Sacramento, who won backing for an amendment forbidding the use of appropriated funds for the closure.

The closure of the Presidio–1,416 acres of land at the base of the Golden Gate Bridge in San Francisco–may be one of the commission’s most lucrative recommendations. All but 32.5 acres of the land by law must be turned over to the National Park Service. The rest of the land, which houses a hospital, under current law is to be offered for lease to the city of San Francisco for use in treating victims of acquired immune deficiency syndrome.

“The full value of the 36.5 acres could be realized if the legislation on lease of Presidio lands were repealed,” the commission report notes, adding that closure will save $314 million initially and $74 million in yearly operating costs.

In recommending that the Navy discontinue construction of a new home port at Hunters Point in San Francisco, the commission anticipates that the Defense Department will save $8 million annually “forever,” Edwards said. The panel proposed that the Navy shift to Pearl Harbor a battleship and two cruisers to have been based at Hunters Point, send one cruiser to Long Beach and one cruiser, two destroyers and two frigates to San Diego.

Although Congress’ acquiescence to the recommendations is expected, the Defense Department must count on more than that if it is to carry out the panel’s proposals, lawmakers said. Edwards said that Congress will have to approve $300 million next year “to prime the pump” with funds until the proceeds from early land sales, which will help pay the initial costs of closures, become available.

It is during the annual appropriations fight that dissident members of the Senate and House may try to win back funding for bases in their states.

“Watch out for appropriations,” Aspin warned. “I’m going to be watching for any such shenanigans. And I hope the press and public will keep an eye out, too.”