The Province: General Information
The Province is the largest of the 23 provinces of Argentina, with a population of approximately 15.6 million inhabitants. It is located in the central-eastern part of the country, in a region known as the “Pampas.” The capital of the Province is the city of La Plata.
The provincial government consists of an executive branch, a legislative branch and a judicial branch. The executive branch consists of a Governor and a Vice Governor, both of whom are elected by popular vote, and a number of ministries, secretariats and other provincial governmental agencies. The legislative branch consists of the Senate and the House of Deputies. The judicial branch consists of trial courts, courts of appeals and the Supreme Court, which have jurisdiction over civil, commercial, administrative, labor, family and criminal matters within the Province. In addition, the provincial constitution provides for the existence of certain provincial agencies that do not fall under any of the three branches of government.
Each of the Province’s 135 municipalities has its own government, responsible for providing basic local services. Pursuant to provincial law, the Province’s municipalities are entitled to receive a percentage of the taxes collected by the Province and the federal government. In addition, several municipalities are entitled to collect certain provincial taxes.
The current President of Argentina, Mauricio Macri, and the Governor of the Province, María Eugenia Vidal, were elected in November 2015 and October 2015, respectively, and both took office in December 2015. The next elections for the President of Argentina and for the Governor of the Province are scheduled for October 2019.
The Provincial Economy
The Province has a diversified economy. The Province’s most significant economic production sectors are (i) manufacturing, (ii) real estate and business activities, (iii) retail and wholesale commerce, (iv) transport, storage and communications, (v) education, social and health services, (vi) construction, and (vii) agriculture, livestock, hunting and forestry. Historically, the Province’s manufacturing sector is the single largest contributor to provincial GDP. The manufacturing sector is highly diversified and, historically, food and beverage production and chemicals have been the most significant contributors to production within this sector.
Public Sector Finances
Historically, the main source of provincial tax revenues has been the collection of the following five main taxes:
• gross revenues tax, which is the single largest source of provincial tax revenue,
• real estate tax,
• tax on automobiles registered in the Province,
• stamp tax levied on several categories of agreements and transactions entered into within the territory of the Province, and
• energy tax.
• inheritances, legacies and gifts tax.
The Province also derives non-tax revenues from various provincial sources, including transfers of net profits or surpluses from provincial entities such as the Institute of Lotteries and Casinos and the Loan Recovery Committee, fees collected by the provincial judicial system, interest accrued on the Province’s deposits with Banco Provincia and on loans granted to municipalities or other unconsolidated provincial agencies and enterprises, and proceeds from the lease of provincial land.
Composition of Expenditures
The Province’s expenditures are allocated to education, health programs, social programs, municipalities, investments in public infrastructure and services, police, courts, prisons and general provincial administration.
Current expenditures consist of costs of personnel, goods and services and current transfers. Personnel expenditures comprise the largest component of the Province’s total expenditures. Capital expenditures include real direct investment, loans and capital contributions to provincial enterprises and loans and transfers to municipalities for public works.
Banco Provincia is the oldest bank in Latin America and is the second largest bank in Argentina in terms of total deposits and assets. Banco Provincia is an entidad autárquica (self-administered public institution) governed by a board of directors appointed by the Governor of the Province with the approval of the provincial Senate. Banco Provincia acts as the financial agent of the Province and collects provincial taxes and duties on the Province’s behalf. The Province guarantees all deposits and other liabilities of Banco Provincia. However, creditors of Banco Provincia that seek to enforce the guarantee must exhaust all legal remedies against Banco Provincia before requesting payment from the Province under the guarantee.
Although Banco Provincia is exempt from compliance with Argentine financial and banking regulations, it voluntarily adheres to the regulatory framework of the Argentine financial sector and therefore complies with the banking regulations and rules adopted by the Central Bank, including minimum capital, solvency and liquidity requirements and the supervisory powers of the Central Bank. Because of its special status as a provincial self-administered public institution, Banco Provincia is not subject to any federal income or other tax liability.
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