Copyright by Franco P. Di Biase 2016
The Thesis Committee for Franco P. Di Biase Certifies that this is the approved version of the following thesis: A Strategic Approach to Improving Argentina s Roadway Infrastructure Financing APPROVED BY SUPERVISING COMMITTEE: Supervisor: Charles Michael Walton Randy Machemehl
A Strategic Approach to Improving Argentina s Roadway Infrastructure Financing by Franco P. Di Biase, B.E. Thesis Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Master of Science in Engineering The University of Texas at Austin May 2016
Dedication A la mamma e al babbo, che mi hanno insegnato che nella vita tutto è possibile se si fa con amore e dedizione; a mio fratello e alle mie sorelle che sono sempre nei miei pensieri e sono i responsabili di volermi superare e dare sempre il meglio di me; alla nonna Lucia, al nonno Giovanni, a la abuela Mary, al abuelo José, alle nipotine, cugini, parenti e famiglia acquisita, perché la famiglia è tutto nella vita; a mis amigos, que son la familia que uno elige; alla famiglia di Austin, Texas; to all the amazing people that I met these past years and to those that I will meet in the years to come.
Acknowledgements I would like to thank my academic advisor Dr. C. Michael Walton for all the guidance and support during my time at The University of Texas at Austin [UT Austin]. This thesis would not exist if it was not for his Transportation Systems Management course. It inspired me to concentrate on the transportation policy and financing issues in my home country, Argentina. I would also like to thank Dr. Jorge Prozzi for offering me this opportunity to pursue my Master s degree here at UT Austin, and for allowing me to join his research group, which gave me first-hand exposure to USDOT and TxDOT projects. I would like to extend my appreciation to Dr. Randy Machemehl for agreeing to be my thesis reader, as well as all my UT Austin professors, and Transportation Engineering program faculty for sharing their knowledge with me. I would also like to extend my gratitude to BEC.AR and UT Austin: without your scholarship programs this experience abroad wouldn t have been possible for me. It was an honor to be awarded with The Argentine Presidential Fellowship in Science & Technology, which, as part of the BEC.AR program, is funded by Argentina s Presidential Cabinet and administered by Argentina s Fulbright Commission. I would also like to thank the International Road Federation for their financial support and for selecting me a member of the prestigious IRF Fellowship Class of 2015. The IRF Road Scholar Program was a once in a lifetime experience I will never forget. To Marcelo E. Lascano Kežic, Arturo Papazian, and Diego Roisinblit, I truly appreciate the time you took to write recommendation letters for me. Thank you for believing in me, and helping me make my dream of studying abroad come true. v
I would like to thank the engineering firms I worked with these past years, especially Halcrow, a CH2M Hill Company, who gave me the opportunity to work globally. It was a pleasure to learn from the most insightful professionals from all over the world and work on such challenging projects. I will be eternally grateful to the whole CH2M family. I extend my appreciation to the School of Engineering at the University of Buenos Aires, more specifically all the Transportation Department professors, for providing me with the best possible education during my Bachelor s degree studies. Last, but not least, I would like to thank all those who encouraged me in this adventure abroad, giving me endless confidence and support, both when making this decision and during my two amazing years at UT Austin. vi
Abstract A Strategic Approach to Improving Argentina s Roadway Infrastructure Financing Franco P. Di Biase, M.S.E. The University of Texas at Austin, 2016 Supervisor: Charles Michael Walton The cyclic economic crises in Argentina have not allowed continuous funding policies for the development, operation, and maintenance of the ground based transportation system. In addition, the inadequate financing system and imbalances introduced gradually in the last 12 years, have set the transportation network into a crisis. The assigned resources are insufficient to maintain and develop the transportation system as required for the country s growth. In order to improve this situation, a long term funding policy should be established as well as conditions to increase public transportation and toll fares, which will encourage private participation and efficiency in the service operation. The purpose of this thesis is to first examine the organization required for financing, promoting, regulating and delivering transportation programs and services in Argentina, and then propose measures to set a long term funding policy for the national roadway system. vii
Table of Contents List of Tables... xi List of Figures... xiv 1. INTRODUCTION 1 2. ORGANIZATIONAL STRUCTURE 7 2.1 Introduction...7 2.2 Federal Government...7 2.2.1 Historical background...12 2.3 Provincial Government...21 2.4 Local Government...21 2.5 United States Organizational Structure...21 2.6 Conclusions...24 3. GROUND BASED TRANSPORTATION INFRASTRUCTURE IN ARGENTINA 25 3.1 Introduction...25 3.2 Roadway System...25 3.2.1 Network configuration...25 3.2.2 Network under concession...37 3.2.2.1 Highway Concessions 1990 2003...38 3.2.2.2 Highway Concessions 2003 2010...40 3.2.2.3 Highway Concessions 2010 2016...41 3.2.3 Roadway Indicators...44 3.3 Public Transportation...46 3.3.1 Railway System...46 3.3.2 Bus System...52 3.3.3 Other Systems...53 viii
4. GOVERNMENT REVENUE 55 4.1 Introduction...55 4.2 Revenue streams for National Administration...56 4.3 Tax Revenue at federal and provincial level...67 4.3.1 Shared (Co-Participated) Taxes...67 4.3.2 Non-Shared Taxes...70 4.3.3 Specifically assigned Taxes...70 4.3.3.1 Liquid Fuel and Natural Gas Tax (Fuel Tax)...74 4.3.3.2 Gasoil and LNG for automotive use tax (Gasoil Tax)..76 4.3.3.3.. Transferal or import of gasoline and natural gas for CNG production Tax (FIH Tax)...77 4.4 Conclusions...77 5. FUNDING GROUND BASED TRANSPORTATION 79 5.1 Introduction...79 5.2 Funding System...79 5.2.1 SIT Resources...82 5.2.2 Subsidies...89 5.2.3 DNV Resources...91 5.2.4 Investment in Roadway Infrastructure...93 5.2.5 Historical background (2001-2014)...94 5.3 Conclusions...108 6. HOW TO IMPROVE ARGENTINA S ROADWAY FUNDING 109 6.1 Introduction...109 6.2 Recommendations...110 6.2.1 Fare updates...111 6.2.2 Subsidy reductions...112 6.2.3 Specific taxes...113 ix
6.3 Conclusions...114 7. CONCLUSIONS 115 APPENDIX A 117 APPENDIX B 120 APPENDIX C 124 BIBLIOGRAPHY 127 x
List of Tables Table 3-1. Roadway Network in Km. Based on (CVF, 2013) and (CVF, 2014)..26 Table 3-2. National Roadway Network in Km. Source (CVF, 2014)....29 Table 3-3. Provincial Roadway Network in Km. Source (CVF, 2013)....30 Table 3-4. National Roadway Network in Km. Source (DNV Data, 2015)....31 Table 3-5. Corridors under concession 1990-2003. Source (Gonzalez & Bortolín, 2014)...39 Table 3-6. Corridors under concession 2003-2010. Source (Gonzalez & Bortolín, 2014)...41 Table 3-7. Corridors under concession 2010-2016. Source (Gonzalez & Bortolín, 2014)...42 Table 3-8. World Development Indicators. Source (World Bank, 2002)...44 Table 3-9. Roadway Network Indicators: Argentina vs LAC. Source (CAF, 2011)45 Table 3-10. Argentina Provinces Roadway Network Indicators. Based on (CVF, 2013) and (CVF, 2014)...45 Table 3-11. Railway Network. Source (CNRT Statistics, 2016)...47 Table 3-12. Freight services. Source (CNRT Statistics, 2016)...47 Table 3-13. Urban services in the AMBA. Based on (CNRT Statistics, 2016)...48 Table 3-14. Urban and Intercity services. Based on (CNRT Statistics, 2016)...50 Table 4-1. Revenue sources. Source (CGN, 2014)...57 Table 4-2. Revenue sources in million ARS (2003-2008). Based on (CGN Data, 2003-2014)...59 Table 4-3. Revenue sources in million ARS (2009-2014). Based on (CGN Data, 2003-2014)...60 xi
Table 4-4. Tax Revenue. Source (CGN, 2014)...62 Table 4-5. Tax Revenue in million ARS (2003-2008). Based on (CGN Data, 2003-2014)...64 Table 4-6. Tax Revenue in million ARS (2009-2014). Based on (CGN Data, 2003-2014)...65 Table 4-7. Revenue sources. Based on (DNIAF, 2015)....67 Table 4-8. Distribution among the different provinces. Source: (Law 25570)....68 Table 4-9. Distribution. Source: (Law 25570)....69 Table 4-10. Total Tax Revenue in million ARS (2003-2008). Based on (DNIAF Data, 2003-2014)....72 Table 4-11. Total Tax Revenue in million ARS (2009-2014). Based on (DNIAF Data, 2003-2014)....73 Table 4-12. Liquid Fuels and Natural Gas Tax. Source (InfoLEG Law 23966, 1991)...74 Table 4-13. Liquid Fuels and Natural Gas Tax Gasoline Distribution....75 Table 4-14. Liquid Fuels and Natural Gas Tax Others Distribution...75 Table 4-15. Liquid Fuels and Natural Gas Tax Revenue & Distribution....76 Table 4-16. FIH Tax resources. Source (InfoLEG Law 26181, 2006)....77 Table 5-1. SIT Resources (2003-2014). Based on (UCOFIN Resources, 2016)...83 Table 5-2. SIT Expenses (2003-2014). Based on (UCOFIN Expenses, 2016)...84 Table 5-3. SITRANS Expenses in ARS million (2003-2014). Based on (UCOFIN Expenses, 2016)....86 Table 5-4. SISVIAL Expenses in ARS million (2003-2014). Based on (UCOFIN Expenses, 2016)....87 xii
Table 5-5. SISVIAL Expenses in ARS million (2003-2014). Based on (UCOFIN Expenses, 2016)....88 Table 5-6. Total roadway system expenditures. Based on (CGN Data, 2003-2014).92 Table 5-7. Total roadway system expenditures. Based on (DNIAF Data, 2003-2014), (CGN Data, 2003-2014) and (UCOFIN Expenses, 2016)....93 Table 5-8. Liquid Fuels and Natural Gas Tax modification. Source (InfoLEG Decree 802, 2001)...95 Table 5-9. Gasoil Tax and Road Fee. Based on (InfoLEG Decree 802, 2001)...96 Table 5-10. Vehicle Classification....96 Table 5-11. Toll Fare reductions. Based on (InfoLEG Decree 802, 2001)...96 Table 5-12. SIT Allocation of resources. Based on (InfoLEG Decree 1377, 2001)98 Table 5-13. SIT Allocation of resources. Based on (InfoLEG Decree 1377, 2001) and (InfoLEG Decree 652, 2002)....101 Table 5-14. SIT Allocation of resources. Based on (InfoLEG Resolution 543, 2003)...102 Table A-1. Economic indicators. Based on (BCRA, 2016) and (INDEC GDP, 2016)....118 xiii
List of Figures Figure 1-1. Argentina in the World. Source (Undersecretariat for Investment, Development, and Trade Promotion, 2014)....5 Figure 1-2. Argentina Map. Source (U.S. Central Intelligence Agency, 1996)....6 Figure 2-1. MPFIPS simplified organizational structure (2003-2008). Based on (InfoLEG Decree 1142, 2003), and (InfoLEG Resolution 58, 2004).15 Figure 2-2. MPFIPS simplified organizational structure (2008-2009). Based on (InfoLEG Decree 1142, 2003), (InfoLEG Resolution 58, 2004), and (InfoLEG Law 26352, 2008)....16 Figure 2-3. MPFIPS simplified organizational structure (2009-2012). Based on (InfoLEG Decree 1142, 2003), (InfoLEG Resolution 58, 2004), (InfoLEG Law 26352, 2008), (InfoLEG Decree 1020, 2009) and (InfoLEG Decree 1193, 2010)....17 Figure 2-4. MPFIPS simplified organizational structure (2012-2015). Based on (InfoLEG Decree 875, 2012), and (InfoLEG Decree 1438, 2012)...18 Figure 2-5. MIT simplified organizational structure (2012-2015). Based on (InfoLEG Decree 875, 2012), (InfoLEG Decree 1438, 2012), (InfoLEG Decree 566, 2013), (InfoLEG Resolution 533, 2013), and (InfoLEG Decree 1004, 2014)....19 Figure 2-6. MIT simplified organizational structure (2015). Based on (InfoLEG Decree 875, 2012), (InfoLEG Decree 1438, 2012), (InfoLEG Decree 566, 2013), (InfoLEG Resolution 533, 2013), (InfoLEG Decree 1004, 2014), (InfoLEG Decree 441, 2015), (InfoLEG Decree 442, 2015), (InfoLEG Law 27132, 2015), and (InfoLEG Law 27161, 2015)....20 xiv
Figure 3-1. National Roadway Network. Source (DNV Map, 2007)....32 Figure 3-2. National Roadway Infrastructure and 2004 AADT. Source (Undersecretariat for Investment, Development, and Trade Promotion, 2014)....33 Figure 3-3. National Roadway Infrastructure and 2007 AADT. Source (FIUBA, 2011)....34 Figure 3-4. Paved National Roadway Network in 1947. Source (Randle, 1981)..35 Figure 3-5. Paved National Roadway Network in 1960. Source (Randle, 1981)..35 Figure 3-6. Paved National Roadway Network in 1970. Source (Randle, 1981)..36 Figure 3-7. National Roadway Network Evolution (1973-2006). Source (DNV Network, 2016)....37 Figure 3-8. Roadway Network under concession. Source (OCCOVI, 2016)....43 Figure 3-9. RGR network in the AMBA. Source (CNRT Map, 2016)...48 Figure 3-10. RRT network in the CABA. Source (GCBA Map, 2016)...49 Figure 3-11. National Railway Network....51 Figure 3-12. Metrobus 9 de Julio....52 Figure 3-13. Bike lanes network in the CABA. Source (GCBA Bike Lanes, 2016).54 Figure 4-1. Current Revenue (2014). Based on (CGN Data, 2003-2014)...58 Figure 4-2. Current Revenue in million ARS (2003-2014). Based on (CGN Data, 2003-2014)...61 Figure 4-3. Tax Revenue (2014). Based on (CGN Data, 2003-2014)...63 Figure 4-4. Tax Revenue in million ARS (2003-2014). Based on (CGN Data, 2003-2014)....66 xv
Figure 5-1. SIT Structure (2004-2014). Based on (InfoLEG Decree 1377, 2001), (InfoLEG Decree 652, 2002), (InfoLEG Resolution 543, 2003), and (InfoLEG Decree 301, 2004)...81 Figure 5-2. SIT Resources (2003-2014). Based on (UCOFIN Resources, 2016)..83 Figure 5-3. SIT Resources in % (2003-2014). Based on (UCOFIN Resources, 2016)...84 Figure 5-4. SIT Expenses (2003-2014). Based on (UCOFIN Expenses, 2016)....85 Figure 5-5. SITRANS Expenses (2003-2014). Based on (UCOFIN Expenses, 2016)...86 Figure 5-6. SISVIAL Expenses (2003-2014). Based on (UCOFIN Expenses, 2016)....88 Figure 5-7. Accumulated subsidies in transportation per jurisdiction 2002-2010. Source (Barbero, Castro, Abad, & Szenkman, 2011)....89 Figure 5-8. Transportation subsidies expenses per resident per jurisdiction in 2010 ARS. Source (Barbero, Castro, Abad, & Szenkman, 2011)....90 Figure 5-9. Total incomes, subsidies, and average fare per automotive public transportation in the AMBA. Period 2003-2013 (in 2004 ARS). Source (ASAP, 2014)....90 Figure 5-10. Revenue vs Subsidies for the automotive public transportation companies in the AMBA. Source (ASAP, 2014)....91 Figure 5-11. DNV Expenses (2010-2014). Based on (CGN Data, 2003-2014)....92 Figure 5-12. Roadway system expenditures. Based on (DNIAF Data, 2003-2014), (CGN Data, 2003-2014) and (UCOFIN Expenses, 2016)....94 Figure 5-13. SIT Structure (2001-2002). Based on (InfoLEG Decree 1377, 2001)98 xvi
Figure 5-14. UCOFIN organizational structure (2001-2003). Based on (InfoLEG Resolution 531, 2001)...99 Figure 5-15. SIT Structure (2002-2003). Based on (InfoLEG Decree 1377, 2001) and (InfoLEG Decree 652, 2002)....100 Figure 5-16. SIT Structure (2003). Based on (InfoLEG Resolution 543, 2003). 102 Figure 5-17. MPFIPS simplified organizational structure- Coordination Units (2003-2004). Based on (InfoLEG Decree 1142, 2003)....103 Figure B-1. MT simplified organizational structure. Source (InfoLEG Decree 8, 2016)....121 Figure B-2. SPT simplified organizational structure. Source (InfoLEG Decree 8, 2016)....121 Figure B-3. SGT simplified organizational structure. Source (InfoLEG Decree 8, 2016)....122 Figure B-4. SOT simplified organizational structure. Source (InfoLEG Decree 8, 2016)....122 xvii
1. INTRODUCTION Argentina, with an area of almost 3.8 million km 21 (1.47 million sq mi) is one of the largest countries in South America. It borders Uruguay, Brazil, and the Atlantic Ocean to the east; Chile to the south and west; and shares its northern border with Bolivia and Paraguay (Figure 1-1). One of its fundamental characteristics is the enormous contrast in its topography and the exceptional climate diversity. The predominantly temperate eastern plains, the Andes Mountains in the west, and the sub-tropical rainforest in the northeast are just a few examples. Argentina is a Federal Republic consisting of 23 Provinces divided into municipalities, and the nation s capital, the Autonomous City of Buenos Aires [CABA Ciudad Autónoma de Buenos Aires] (Figure 1-2), which as any other province, has jurisdiction on justice, health, and transportation, among others. The current population is approximately 40.1 million inhabitants. Argentina has a high rate of urbanization with 93% of the population living in metropolitan areas, such as CABA, Rosario, Mendoza, and Córdoba. Population density is relatively low and varies considerably throughout the country s different regions. The average density for mainland Argentina is 14.4 inhabitants per km 2 (37.3 inhabitants per sq mi) although it ranges from 14,451 per km 2 (37,427 per sq mi) in the CABA, to 1 per km 2 (2.6 per sq mi) in the province of Santa Cruz (INDEC, 2015). 1 Argentina covers 2.8 million km 2 (1.08 sq mi), with an additional 969 thousand km 2 (374 thousand sq mi) on Antarctica (INDEC, 2015). 1
Almost one third of the population, around 13 million people, reside in CABA and the 24 municipalities that make up the surrounding suburbs in the province of Buenos Aires, generally referred to as the Metropolitan Area of Buenos Aires [AMBA Área Metropolitana de Buenos Aires]. Currently, one of the major challenges in this dense area is to improve highway accesses and the public transportation system to reduce traffic congestion. Argentina s political framework is based on a federal representative democratic republic with a traditional division of powers. The executive branch is led by the President, elected for four year term with only one optional re-election. The legislative branch is represented by the National Congress, which is divided in the Senate and House of Representatives. The judicial branch is comprised of the Supreme Court of Justice, the National Council of Magistrates and the lower courts. At a provincial level, the political structure presents a similar division of powers: Governor, Provincial Congress and Provincial Court of Justice. The country s economy depends on agricultural exports, a diversified industrial base, and a well-established service sector. As a leading commodities and raw materials producer and exporter, Argentina has over 60% of its 170 million of productive hectares (420 million acres) dedicated to agricultural production. The industrial base showcases key sectors such as agribusiness, automotive, pharmaceuticals, chemicals and petrochemicals, biotechnology and design manufacturing. The traditional service sectors are gradually developing niche expertise in the most sophisticated segments of the value chain, with exponential growth in software and IT services as well as a wide variety of high addedvalue professional services (Undersecretariat for Investment, Development, and Trade Promotion, 2014). 2
The national transportation network development is a direct consequence of Argentina's agro export economic model. For example, most of the roadway and railway trunk networks connect to the major ports located in the Parana River and La Plata River, adjacent to the Atlantic Ocean. Since the 2001 economic crisis, the transportation system is either partially or totally subsidized, especially in the AMBA. The federal government has been very reluctant to increase tolls as well as public transportation fares, protecting consumers from raising inflations rates but discouraging companies from investing in new technologies, infrastructure or improving the service provided. Therefore, to compensate the private operating companies, subsidies were included into the equation, generating system distortions, which have been very difficult to eliminate, even though the federal treasury is financing them with debt. The cyclical economic crises in Argentina have not allowed continuous funding policies for the development, operation, and maintenance of the ground based transportation system; neither have the inadequate financing system nor the gradually introduced imbalances of these past 12 years with constant inflation and freezing of transportation user fees. Currently, companies that provide urban and suburban public transportation services have 80% to 90% of their incomes in subsidies (ASAP, 2014) (Barbero, Castro, Abad, & Szenkman, 2011). Most are concentrated in the AMBA which makes it inequitable for the population in other regions. In addition, due to the increase in subsidies, validating the efficiency and auditing the complex structure of the trust fund that finances the ground based transportation system becomes an extremely difficult task. The assigned resources are not enough to maintain and develop the transportation system as required. A dedicated trust fund is considered to be a key factor to minimize the 3
discretionary resource allocation from one year to the next. However, in Argentina, most trust fund resources do not come from specific taxes related to transportation activities. In order to improve this situation, a long term funding policy should be established as well as developing conditions to increase tolls and public transportation fares, which will encourage private participation. The private sector should know that their investment and efficiency will be compensated. The purpose of this thesis is to first examine the organizations required for financing, promoting, regulating and delivering transportation programs and services in Argentina, and then propose measures to set a long term funding policy for the national roadway system. Information on Argentina s economic evolution is provided in Appendix A in order to understand the funding policies adopted by the government. The different economic issues such as inflation, devaluation of its currency, manipulation of the inflation and GDP statistics, and multiple exchange rates with the USD have been taken into consideration so the values presented in this report are expressed in Argentine Pesos (ARS) and in nominal values, unless otherwise specified. 4
Figure 1-1. Argentina in the World. Source (Undersecretariat for Investment, Development, and Trade Promotion, 2014). 5
Figure 1-2. Argentina Map. Source (U.S. Central Intelligence Agency, 1996). 6
2. ORGANIZATIONAL STRUCTURE 2.1 Introduction In this section, a detailed study of Argentina s transportation organizational structure is presented. Before focusing on the aim of this thesis, it is important to examine those responsible for financing, promoting, regulating and delivering transportation programs and services. In December 2015, while this thesis was under process, Mauricio Macri took office as the Argentine president. The national government s organizational structure has been modified as part of a state modernization plan launched by the new administration. Those changes were made official in April 2016 (Appendix B) so time is needed to appreciate their evolution. As a result, the period taken into consideration is 2003-2015, under the presidencies of Nestor Carlos Kirchner (2003-2007) and Cristina Fernandez de Kirchner (2007-2011 & 2011-2015). 2.2 Federal Government The federal government is in charge of developing the national transportation network through the Secretariat of Public Works [SOP - Secretaría de Obra Pública] and the Secretariat of Transportation [ST - Secretaría de Transporte], part of the Ministry of Federal Planning, Public Investment & Services [MPFIPS - Ministerio de Planificación Federal, Inversión Publica y Servicios] and the Ministry of Interior and Transportation [MIT Ministerio de Interior y Transporte]. From 2003 to 2012 both secretaries were part of the MPFIPS, however, before 2003, they formed part of a different ministry; their 7
purposes have been constant in time, except for minor modifications. In Argentina, every president modifies the government s organizational structure according to their needs. In most cases, it is a matter of division of power between ministers, rather than for organizational reasons. As described further ahead in this thesis, the Infrastructure Trust Funds Coordination Unit [UCOFIN Unidad de Coordinación de Fidecomisos de Infraestructura] is a decentralized agency of the Ministry of Economy and Public Finances [MEFP - Ministerio de Economía y Finanzas Públicas] that assists the MPFIPS and the MIT in the administration of the resources created to finance infrastructure. The UCOFIN manages several trust funds, including one that finances ground transportation. The MPFIPS is in charge of planning, executing and controlling the expansion and improvement of the national infrastructure (Decree 1142/2003). Similarly, for the national highway system, this objective is carried out through the Undersecretariat of Public Works [SubSOP - Subsecretaría de Obras Públicas] and two decentralized agencies: the National Directorate of Roads [DNV - Dirección Nacional de Vialidad], and the Controlling Body of Roadway Concessions [OCCOVI - Órgano de Control de Concesiones Viales] which operates inside the DNV since 2009 (Decree 1020/2009). The SubSOP is responsible for coordinating and assisting the execution of public works related to roadway projects, as well as participating in the trust funds that finance them. The DNV is in charge of the planning, supervising, and maintaining the primary national road network as well as providing assistance to the different Provincial Directorate of Roads [DPV - Dirección Provincial de Vialidad]. The OCCOVI is in charge of the supervision, inspection, audit and control of the 9,000 kilometers of national routes given into concession to private companies. These roadways under concession are divided into 8
corridors that pass through 13 provinces, through which approximately 85% of export products are transported (Bermudez, 2012). The MIT, through the Secretariat of Transportation [ST], is responsible for the transportation system coordination, administration and regulation at a national level. It is responsible for developing policies for different means of transportation: air, and land (both rail, and road). The ST was originally a Secretariat of the MPFIPS, but in June 2012, it was given a Ministry rank, as a consequence of the tragic Once Station rail disaster where 51 people died and 700 were injured when an interurban train hit the buffers at the end of the line. In addition, in March 2015, the Undersecretariat of Ports and Waterways [SubSPyVN - Subsecretaría de Puertos y Vías Navegables] as well as the General Ports Administration [AGP Administración General de Puertos S.E.] state enterprise were transferred to the MEFP due to political reasons. The ST oversees five undersecretaries, eleven decentralized agencies and one deconcentrated agency that help to regulate and control the system. The Undersecretariat of Automotive Transportation [SubSTAut Subsecretaría de Transporte Automotor] is responsible for developing, implementing and monitoring all domestic and international automotive tranportation policies, plans and programs, cargo and passengers; as well as permits and concessions to provide transportation services. The Undersecretaty of Railroad Transportation [SubSTF - Subsecretaría de Transporte Ferroviario] has similar functions as the UAT but for rail services, plus responsibility for supervising railway companies, in which the federal government is a shareholder. 9
The Undersecretariat of Commercial Aviation [SubSTAer - Subsecretaría de Transporte Aerocomercial] has similar responsibilities for commercial aviation services. The Undersecretariat of Administrative Transportation Management [SubSGAT Subsecretaría de Gestión Administrativa del Transporte] coordinates relations between the ST and its undersecretaries as well as other ministries or jurisdictions. Moreover, it is responsible for designing budgetary policies of the area and monitoring compensation of fares within different transportation services. The Undersecretariat of Regulation of Transportation Standards [SubSRNT Subsecretaría de Regulación Normativa del Transporte] is responsible for defining the regulatory criteria of the transportation system in order to improve efficiency and use of its infrastructure. In addition, it is responsible for the development of the Unified Electronic Payment System Ticket [SUBE Sistema Único de Boleto Electrónico]. The National Commission for Transportation Regulation [CNRT - Comisión Nacional de Regulación del Transporte] is a decentralized agency responsible for all ground based transportation at a federal level. The Regulatory Body of the National Airport System [ORSNA Organismo Regulador del Sistema Nacional de Aeropuertos] is a decentralized agency responsible for all passenger services provided in national airports. The National Administration of Civil Aviation [ANAC Administración Nacional de Aviación Civil] is a decentralized agency responsible for administrating, regulating, controlling and certifying commercial aviation activities. It is also responsible for providing adequate aviation infrastructure and ensuring the efficiency of aviation services. 10
Civil Aviation Accident Investigation Board [JIACC - Junta De Investigación De Accidentes De Aviación Civil] is a decentralized agency responsible for determining the cause of civil aviation accidents and incidents, as well as to recommend actions to prevent them and promote safety. Air Navigation Argentine Company [EANA - Empresa Argentina De Navegación Aérea S.E.] is a state enterprise responsible for providing air navigation operational control, as well as coordinating and monitoring air traffic control actions. Railway Infrastructure Administration [ADIF Administración de Infraestructura Ferroviaria S.E.] is a state enterprise in charge of construction, administration, and maintenance of railway infrastructure, which in most cases is used by private companies under concession contracts. Railway Operator [SOF Operadora Ferroviaria S.E.] is also a state enterprise responsible for railway transportation provision of both cargo and passengers, as well as for rolling stock maintenance. Belgrano Cargas & Logistica [BCyL Belgrano Cargas y Logística S.A.] is a limited state company responsible for the exploitation of the entire cargo network of the General Belgrano Railway [FCGB Ferrocarril General Belgrano], the General San Martín Railway [FCGSM Ferrocarril General San Martín], and the General Urquiza Railway [FCGU Ferrocarril General Urquiza]. Argentine Railway [FA - Ferrocarriles Argentinos S.E.] is a state enterprise in charge of articulating the different task and responsibilities assigned to ADIF, SOF, and BCyL in the railway sector. Railway Human Resources Management [ARHF - Administradora De Recursos Humanos Ferroviarios S.A.P.E.M.] is a state enterprise, where the state has the 11
majority of the participation, specialized in providing staff management services to the public administration. The National Agency of Road Safety [ANSV - Agencia Nacional de Seguridad Vial] was developed in 2008, under the MIT, in order to reduce deaths and injuries in the transportation system. This decentralized agency, through its Permanent Road Safety Observatory [OPSV - Observatorio Permanente en Seguridad Vial], is recognized in South America for its effort to reach the zero death and serious injuries objective established by the United Nations [UN]. Argentine Institute for Transportation [IAT - Instituto Argentino Del Transporte], is a deconcentrated agency created to discuss a long term vision for transportation in Argentina and consequently develop and update the Strategic Federal Transportation Plan. 2.2.1 HISTORICAL BACKGROUND Decree 1142/2003 and Resolution 58/2004. The MPFIPS was created. The SOP and the ST were part of this ministry, as well as the OCCOVI, responding to the SOP, and the DNV, responding to the SubSOP. Decree 239/2007. The ANAC was created as a decentralized agency of the ST. However, it did not start to operate until 2009. Law 26352 (2008) and Resolution 1413/2008. The ADIF and SOF were created to manage the railway infrastructure and operate the railway system respectively, as state enterprises under the MPFIPS jurisdiction. The railway infrastructure was transferred from the National Agency for Property Management [ONAB Organismo Nacional de Administración de Bienes] to the ADIF and SOF. 12
Law 26363 (2008) and Decree 1787/2008. The ANSV was created as a decentralized agency, part of the Ministry of Domestic Affairs [MI Ministerio del Interior]. Decree 1020/2009. The OCCOVI was relocated under the DNV jurisdiction, and consequently relocated under the SubSOP jurisdiction. Decree 1193/2010. The JIACC was transferred from the Argentine Air Force influence to the ST. Decree 875/2012 and Decree 1438/2012. The ST was moved under the MI influence. Consequently, the MIT was created in order to give transportation system priority. As a consequence, two new undersecretaries were created below the ST: the SubSGAT and the SubSRNT. Decree 566/2013, Resolution 471/2013 and Resolution 490/2013. The BGyL was created to manage and operate the railway cargo services for the FCGB, FCGSM, and FCGU. Resolution 533/2013. The ARHF was created to provide staff management services to the public administration. Decree 1004/2014. The IAT was created to participate in the elaboration of a transportation strategic plan and provide assistance to the MIT regarding transportation policy matters. Decree 441/2015 and Decree 442/2015. The SubSPyVN, responsible for elaborating, executing and controlling the maritime and waterway transportation policies and plans, and the AGP state enterprise were moved under the MEFP influence. Law 27132 (2015). The FA was created to articulate the railway activities executed by ADIF, SOF, and BCyL. 13
Law 27161 (2015). The EANA as a state enterprise within the MIT to coordinate and monitor air traffic control actions. 14
Figure 2-1. MPFIPS simplified organizational structure (2003-2008). Based on (InfoLEG Decree 1142, 2003), and (InfoLEG Resolution 58, 2004). 15
Figure 2-2. MPFIPS simplified organizational structure (2008-2009). Based on (InfoLEG Decree 1142, 2003), (InfoLEG Resolution 58, 2004), and (InfoLEG Law 26352, 2008). 16
Figure 2-3. MPFIPS simplified organizational structure (2009-2012). Based on (InfoLEG Decree 1142, 2003), (InfoLEG Resolution 58, 2004), (InfoLEG Law 26352, 2008), (InfoLEG Decree 1020, 2009) and (InfoLEG Decree 1193, 2010). 17
Figure 2-4. MPFIPS simplified organizational structure (2012-2015). Based on (InfoLEG Decree 875, 2012), and (InfoLEG Decree 1438, 2012). 18
Figure 2-5. MIT simplified organizational structure (2012-2015). Based on (InfoLEG Decree 875, 2012), (InfoLEG Decree 1438, 2012), (InfoLEG Decree 566, 2013), (InfoLEG Resolution 533, 2013), and (InfoLEG Decree 1004, 2014). 19
Figure 2-6. MIT simplified organizational structure (2015). Based on (InfoLEG Decree 875, 2012), (InfoLEG Decree 1438, 2012), (InfoLEG Decree 566, 2013), (InfoLEG Resolution 533, 2013), (InfoLEG Decree 1004, 2014), (InfoLEG Decree 441, 2015), (InfoLEG Decree 442, 2015), (InfoLEG Law 27132, 2015), and (InfoLEG Law 27161, 2015). 20
2.3 Provincial Government At a provincial level promoting, regulating, and delivering transportation programs and services present a similar structure to the national level with a reduced number of agencies. Each province has its own Ministry of Infrastructure [MI] with an Undersecretariat of Public Works [UPW] responsible for planning, developing, supervising and maintaining the transportation network. In addition, the province secondary roadway network is administrated by the DPVs, which works collectively with the UPW and the DNV. Furthermore, each province has a specific unit in charge of the ground base transportation, usually within the MI. 2.4 Local Government At a local level, provinces are divided into municipalities. In many cases, their structure is too small to have transportation professionals. Therefore, the municipalities work with the provincial and federal government in order to manage the local infrastructure and services. 2.5 United States Organizational Structure The United States Department of Transportation [USDOT] is one of the seventeen executive departments of the United States [US] government. The head of the USDOT is the Secretary of Transportation, responsible for leading the Office of the Secretary [OST]. The OST administers the formulation of national transportation policy and promotes intermodal transportation (49 U.S. Code, 2004). 21
The USDOT was created by President Lyndon B. Johnson in 1966 when he elevated transportation to a Cabinet level position. The U.S. has a longer tradition in prioritizing transportation than Argentina: they understood from the beginning that their economic growth was directly tied to infrastructure development, which would lead to trade and prosperity across the nation. Consequently, its organizational structure is much more mature. According to its website (U.S. Department of Transportation, 2016), the USDOT oversees the following eleven agencies. National Highway Traffic Safety Administration [NHTSA]: responsible for reducing deaths, injuries and economic losses resulting from motor vehicle crashes. Federal Aviation Administration [FAA]: oversees the safety of civil aviation. Office of Inspector General [OIG]: provides independent and objective reviews of the economy, efficiency, and effectiveness of programs and operations in the USDOT. Federal Highway Administration [FHWA]: coordinates highway transportation programs in cooperation with states and other partners to enhance the country's safety, economic vitality, quality of life, and the environment. Pipeline and Hazardous Materials Safety Administration [PHMSA]: oversees the safety of more than 800,000 daily shipments of hazardous materials in the United States and 64 percent of the nation's energy that is transported by pipelines. Federal Motor Carrier Safety Administration [FMCSA]: its primary mission is to prevent commercial motor vehicle-related fatalities and injuries. Federal Railroad Administration [FRA]: promotes safe and environmentally sound rail transportation. 22
Saint Lawrence Seaway Development Corporation [SLSDC]: operates and maintains a safe, reliable and efficient waterway for commercial and noncommercial vessels between the Great Lakes and the Atlantic Ocean. Federal Transit Administration [FTA]: assists in developing improved mass transportation systems for cities and communities nationwide. Surface Transportation Board [STB]: is an independent, bipartisan, adjudicatory body organizationally housed within the DOT. It is responsible for the economic regulation of interstate surface transportation, primarily railroads, within the United States. The STB's mission is to ensure that competitive, efficient, and safe transportation services are provided to meet the needs of shippers, receivers, and consumers. Maritime Administration [MARAD]: promotes development and maintenance of an adequate, well-balanced, United States merchant marine, sufficient to carry the Nation's domestic waterborne commerce and a substantial portion of its waterborne foreign commerce, and capable of serving as a naval and military auxiliary in time of war or national emergency. Analyzing the responsibilities of these eleven agencies it is possible to find similarities with the different secretariats, undersecretariats or decentralized agencies that constitute the Argentine transportation organizational structure. In the first place, the USDOT is equivalent to the ST, as the MIT is not exclusively dedicated to transportation. The DNV could be easily compared to the FHWA, especially for their role in developing the national roadway network. Moreover, the MARAD could be matched up with the SubSPyVN, and the FRA with the SubSTF, while the NHTSA has similar responsibilities than the ANSV, and the FAA than the ANAC and ORSNA. 23
However, there are also differences in the way both transportation structures are organized. Argentina divides its structure by mode of transportation while the U.S. divides its agencies not only by mode but also by programs, which allows a more comprehensive approach. 2.6 Conclusions Argentina has never been consistent with its organizations responsible for financing, promoting, regulating and delivering transportation programs and services. Every president elected has modified the government s organizational structure according to his needs. In most cases, the ministries had more or less responsibilities/secretariats depending on the power the president decides to transfer, not as a consequence of their qualifications. USDOT was created by President Lyndon B. Johnson in 1966. Despite the fact that some of its functions have changed with time its core structure has been consistent. For transportation to have the key role it deserves, the creation of a Ministry of Transportation that includes the modes (ground, air, and water) and is maintained through time is extremely important. Argentina should stop grouping secretariats under big ministries, which are frequently restructured for political reasons, so as to provide coherent policies instead. Mauricio Macri s new administration is on the right track with some modifications executed in the organizational structure for regulating, promoting, and delivering transportation program and services (Appendix B). However, more time is required to be able to analyze the results and its efficiency. 24
3. GROUND BASED TRANSPORTATION INFRASTRUCTURE IN ARGENTINA 3.1 Introduction The aim of this chapter is to describe the ground based transportation infrastructure that currently exists in Argentina in order to provide the reader with a basic knowledge of roadway and railway systems, as well as others within public transportation. 3.2 Roadway System 3.2.1 NETWORK CONFIGURATION The trunk national roadway network was created between 1930 and 1940. In the following years it was developed, improved, and extended by the DNV. However, this process was never continuous since it was interrupted several times by lack of funds. In 1940 the roadway system was constituted by 40,514 km (25,174 mi). Only about 11% of the roads were paved, while 68% were untreated roads. Between 1950 and 1960, the network increased by 32% and the extension of the treated roads 93%. The paved national network started to grow dynamically, with annual rates that reached 9.4% during the first 5 years of the 1960s (Bermudez, 2012). During the 1970s, many of the national roadway systems treated and untreated roads were transferred to provincial jurisdiction and the average annual growth rate of the network administrated by the DNV was negative. Consequently, in 1980 they managed only 37,909 km (23,556 mi). Between 1978 and 1981, it decreased drastically from 44,149 km (27,433 mi) to 34,787 km (21,616 mi), which represents an average annual decrease of about 7.6%. 25
During those decades, the DNV focused its resources on paving the national roadway system: in 1960 paved roads represented about 9,700 km (6,027 mi), while in 1970 about 20,800 km (12,925 mi), in 1980 about 24,985 km (15,252 mi), and in 1990 about 28,017 km (17,409 mi) (DNV Network, 2016). Currently, the road network consists of approximately 640 thousand km (398 thousand mi) (Table 3-1). About 40 thousand km (24.9 thousand mi) represent the national network, which is formed by 9 thousand km (5.6 thousand mi) of highways and divided dual lane roadways, and 30 thousand km (18.6 thousand mi) of arterial roads with unpaved shoulders (Urdapilleta & Mancino). The primary network is run by the DNV and almost 90% of it is paved. The provincial network, managed by the DPVs, consists of almost 200 thousand km (124.3 thousand mi). About 58% of it is still unpaved. Finally, the tertiary system is managed at a local level and consists of 400 thousand km (248.6 thousand mi). Surface National Network Provincial Network Local Network Paved 36,558 90.9% 44,861 22.6% - - Treated 2,731 6.8% 39,234 19.8% - - Untreated 909 2.3% 114,194 57.6% - - Subtotal 40,198 100.00% 198,289 100.00% 400,000 100.00% Total 638,487 Table 3-1. Roadway Network in Km. Based on (CVF, 2013) and (CVF, 2014). Argentina s roadway system supports more than the 95% of the cargo transported through the country and 100% of the passengers transported (Agosta R., 2010). The National Roadway Network is used by 90% of the vehicle fleet, which includes trucks, semitrailers, buses, and passenger vehicles (Pineda, de la Peña González, Miralles Olivar, 26
Díaz Toribio, & González Artero, 2013). In different sections the heavy vehicles could represent between a 45% and 50% of traffic volume. According to the DNV website (DNV Website, 2016), the following management systems are currently used to maintain, improve and operate the roadway system. Concessions with toll roads. This adds up to approximately 9,180 km (5,704 mi) of the National Network are administrated under this method, of which 8,890 km (5,524 mi) correspond to the highway corridors under concession, and 290 km (180 mi) of highways that provide access to CABA and the City of Cordoba. The concessionaire is responsible to: (a) maintaining, operating, and managing the corridor; (b) maintaining and restoring the signalization; (c) providing services to the road users; (d) ensuring minimum road conditions; (e) executing works to add or improve capacity. These roadway corridors, usually have an Annual Average Daily Traffic [AADT] of 3,000 vehicles/day. It is the roadway network with more traffic volume and consequently requires more maintenance. Performance-based Road Rehabilitation and Maintenance Contracts [CREMA Contratos de Recuperación y Mantenimiento] The CREMA requires the Contractor to rehabilitate and subsequently maintain a sub-network of roads under a lump-sum contract for a total period of five years. Rehabilitation works are carried out during the first year, while maintenance activities are undertaken throughout the next 4-year contract period. 27
Maintenance Agreement The DPVs are hired to perform routine maintenance and conservation of different national roadway network sections. The aim is to gradually transfer all these management responsibilities to the provinces. Concession with private funding [also known as COT or concessions without tolls] Private companies are accountable for rehabilitating, maintaining, operating and managing specific stretches of the national roadway network upon the promise to receive a monthly payment during a 10 years concession period. Toll user fees are not collected. There are currently two corridors, with an extension of 6,269 km (3,895 mi), being administrated under this management system. Maintenance Administration. The DNV staff uses its own equipment to perform maintenance and conservation routines of different stretches of the national roadway network that is not managed by any of the previously mentioned systems. On a provincial level, most maintenance, rehabilitation, and capacity extension works are performed by the DPVs. 28
National Roadway Network Province Paved Treated Untreated Total Percentage Buenos Aires 4,672 0 0 4,672 11.6% Catamarca 1,083 42 0 1,125 2.8% Córdoba 2,715 0 0 2,715 6.8% Corrientes 1,754 0 0 1,754 4.4% Chaco 987 0 0 987 2.5% Chubut 1,874 291 0 2,165 5.4% Entre Ríos 1,608 0 0 1,608 4.0% Formosa 1,265 0 42 1,307 3.3% Jujuy 750 423 16 1,189 3.0% La Pampa 1,480 0 191 1,671 4.2% La Rioja 1,892 0 0 1,892 4.7% Mendoza 1,674 324 199 2,197 5.5% Misiones 744 0 78 822 2.0% Neuquén 1,429 0 0 1,429 3.6% Rio Negro 1,901 469 0 2,370 5.9% Salta 1,398 275 178 1,851 4.6% San Juan 1,143 64 65 1,272 3.2% San Luis 960 0 0 960 2.4% Santa Cruz 2,471 433 0 2,904 7.2% Santa Fe 2,498 0 94 2,592 6.4% Santiago del Estero 1,435 0 46 1,481 3.7% Tierra del Fuego 291 369 0 660 1.6% Tucumán 534 41 0 575 1.4% Total 36,558 2,731 909 40,198 100% Percentage 90.9% 6.8% 2.3% 100.0% - Table 3-2. National Roadway Network in Km. Source (CVF, 2014). 29
Provincial Roadway Network Province Paved Treated Untreated Total Percentage Buenos Aires 10,657 0 24,766 35,423 17.86% Catamarca 1,130 2,004 355 3,489 1.76% Córdoba 4,747 2,374 9,496 16,617 8.38% Corrientes 809 2,330 2,935 6,074 3.06% Chaco 888 329 4,944 6,161 3.11% Chubut 463 3,632 2,138 6,233 3.14% Entre Ríos 1,708 2,207 9,279 13,194 6.65% Formosa 693 138 1,938 2,769 1.40% Jujuy 518 348 2,629 3,495 1.76% La Pampa 2,353 445 5,332 8,130 4.10% La Rioja 669 3,184 170 4,023 2.03% Mendoza 3,145 3,789 6,849 13,783 6.95% Misiones 1,231 0 1,696 2,927 1.48% Neuquén 1,008 3,679 2,330 7,017 3.54% Rio Negro 651 2,152 3,546 6,349 3.20% Salta 813 2,360 4,098 7,271 3.67% San Juan 1,095 2,187 1,183 4,465 2.25% San Luis 3,389 667 4,408 8,464 4.27% Santa Cruz 1,393 2,415 3,454 7,262 3.66% Santa Fe 3,893 595 8,408 12,896 6.50% Santiago del Estero 2,520 3,500 13,036 19,056 9.61% Tierra del Fuego 5 0 718 723 0.36% Tucumán 1,083 899 486 2,468 1.24% Total 44,861 39,234 114,194 198,289 100% Percentage 22.6% 19.8% 57.6% 100.0% - Table 3-3. Provincial Roadway Network in Km. Source (CVF, 2013). 30
District Province Urban Rural Total Percentage (1) Configuration Type of Terrain (2) 1+1 > 1+1 Highway Level Rolling Mountain Table 3-4. National Roadway Network in Km. Source (DNV Data, 2015). 31 (1)+(2) (1)+(2) 1 & 19 Buenos Aires 24 3,922 237 489 4,648 99% 1% 0% 4,672 11.6% 2 Córdoba 149 2,225 43 299 2,566 94% 6% 0% 2,715 6.8% 3 Tucumán 0 519 22 34 575 94% 1% 5% 575 1.4% 4 Mendoza 31 1,939 197 30 2,166 70% 21% 9% 2,197 5.5% 5 Salta 18 1,794 38 0 1,832 60% 25% 14% 1,850 4.6% 6 Jujuy 0 1,145 12 31 1,188 33% 53% 14% 1,188 3.0% 7 Santa Fe 62 2,168 179 183 2,529 100% 0% 0% 2,592 6.5% 8 La Rioja 32 1,838 18 0 1,856 87% 6% 7% 1,888 4.7% 9 San Juan 9 1,241 2 20 1,263 50% 36% 14% 1,272 3.2% 10 Corrientes 0 1,592 162 0 1,754 98% 2% 0% 1,754 4.4% 11 Catamarca 12 1,111 2 0 1,113 56% 35% 10% 1,124 2.8% 12 Neuquén 13 1,392 23 0 1,415 33% 52% 15% 1,428 3.6% 13 Chubut 16 2,074 75 0 2,149 59% 40% 0% 2,165 5.4% 14 San Luis 7 745 208 0 953 100% 0% 0% 960 2.4% 15 Misiones 5 813 3 0 817 10% 90% 0% 822 2.0% 16 Santiago del Estero 27 1,454 0 0 1,454 98% 1% 0% 1,481 3.7% 17 Entre Ríos 21 1,192 390 5 1,587 100% 0% 0% 1,608 4.0% 18 Chaco 2 969 16 0 985 100% 0% 0% 987 2.5% 20 Río Negro 6 2,338 26 0 2,364 78% 22% 0% 2,370 5.9% 21 La Pampa 0 1,665 6 0 1,671 97% 3% 0% 1,671 4.2% 22 Formosa 4 1,303 1 0 1,304 100% 0% 0% 1,308 3.3% 23 Santa Cruz 10 2,847 27 0 2,874 76% 24% 0% 2,884 7.2% 24 Tierra del Fuego 6 654 0 0 654 33% 47% 20% 660 1.6% Total 453 36,938 1,687 1,091 39,716 - - - 40,170 100%
Figure 3-1. National Roadway Network. Source (DNV Map, 2007). 32
Figure 3-2. National Roadway Infrastructure and 2004 AADT. Source (Undersecretariat for Investment, Development, and Trade Promotion, 2014). 33
Figure 3-3. National Roadway Infrastructure and 2007 AADT. Source (FIUBA, 2011). 34
Figure 3-4. Paved National Roadway Network in 1947. Source (Randle, 1981). Figure 3-5. Paved National Roadway Network in 1960. Source (Randle, 1981). 35
Figure 3-6. Paved National Roadway Network in 1970. Source (Randle, 1981). 36
Figure 3-7. National Roadway Network Evolution (1973-2006). Source (DNV Network, 2016). 3.2.2 NETWORK UNDER CONCESSION The roadway system under concession represents about 25% of the national network, and roughly 4% of the national and provincial network combined. Approximately 65% of all network traffic flow uses its infrastructure (Bermudez, 2012). The highway concessions experience in Argentina can be summarized in three different stages, which are described below (Gonzalez & Bortolín, 2014). 37
3.2.2.1 Highway Concessions 1990 2003 Decree 2039/1990, was created in September 1990, to give to 13 private companies the concession of approximately 32% of the paved national roadway system, equivalent to 8,867 km (5,510 mi) containing the highest traffic density. This represented Argentina s first tolled roads experience. For the first time private companies were responsible for the administration, maintenance, and operation of a considerable portion of the national roadway network. The adoption of this new financing source, where the real transportation customers had to pay for using the infrastructure, represented a major change. Until that moment, the roadway system had been historically administrated through traditional funding resources by the DNV: a gasoline tax, lubricants and tires tax, and loans from international financial institutions. The aim of this concession process was to restore the existing infrastructure s conditions as well as to transfer all responsibilities to the private sector. The concessionaire was responsible for performing initial works before starting toll collection, with a specified price indexation, as well as operating and maintaining the network. Performance based measures were incorporated in the contracts to maintain specific quality levels. A Condition Index [IE - Índice de Estado] and a Present Serviceability Index [ISP Índice de Serviciabilidad Presente] were used to measure the results of the rehabilitation works, while maximum tolerable levels for rutting, rugosity, cracking, and potholes were established to control the maintenance results. The agreement established that the concessionaires had to pay the Federal Government an annual fee in order to operate the toll roads. However, this never happened because in March 1991, only 5 months after signing the contracts, the Convertibility Law [Ley de Convertibilidad] (Law 23928), by which ARS 1.00 was equal to USD 1.00, was 38
approved and the contracts were renegotiated. In order to reduce the toll established, the federal government started to subsidize the concessionaires. The subsidies between 1991-1999 represented approximately 20% of the total concession system incomes, while from 1999 to 2003 the subsidies increased 56% due to different toll reductions for different types of vehicles. Corridor Extension (km) Concessionaire National Routes 1 665 Semacar 3-252 2 297 Semacar 205 3 507 Caminos del Oeste 7 4 697 Caminos del Oeste 8-193 5 421 Nuevas Rutas 7 6 479 Covico 188 7 247 Servicios Viales 9 - A012 8 695 Servicios Viales 11 - A009 9 233 Servicios Viales 33 10 332 Covicentro 9 11 714 Covinorte 34 12 481 Covinorte 9-34 13 946 Virgen de Itatí 12-16 14 280 Rutas del Valle 19 16 404 Caminos del Abra 226 17 540 Nuevas Rutas 5 18 618 Caminos del Río Uruguay 14-135 - A015-117 - 12-193 20 309 Red Vial Centro 36-38 - A005 Total 8,867 Table 3-5. Corridors under concession 1990-2003. Source (Gonzalez & Bortolín, 2014) Thus, the goals established by the federal government were not achieved and contracts agreements were defective. If the traffic flow increased the extra revenue was transferred from the concessionaires to the federal government, who would be responsible for its use to develop and improve the rest of the highway network under its jurisdiction. 39
Consequently, as the concessionaires didn t benefit from this, they didn t execute any improvements that could lead to higher traffic volume; they just focused on reducing their operation and maintenance costs in order to increase their revenue. 3.2.2.2 Highway Concessions 2003 2010 The aim of this new concessions period was to balance the concessionaires finances while reducing government subsidies, and reconfigure the corridors so as to reduce the concessionaire administration costs with an economy of scales. To achieve this, the corridors were grouped into 6 new units, rehabilitation works were transferred to the federal government, who would bid them separately to different contractors (Decree 802/2001). The concessionaire would only be responsible for operating and maintaining the existing infrastructure. Moreover, the federal government would be responsible for redistributing the monthly toll incomes, which had to be deposited in the Transportation Infrastructure System [SIT Sistema de Infraestructura de Transporte] trust fund per Decree 1006/2003, deducting the established concessionaire fees/canon and deducting the requested subsidies. The remaining resources had to be used to finance the rehabilitation works in the network under concession. Out of the six corridors, five had to pay a fee to the government to exploit the concession while the remaining had to be subsidized. The average length per corridor changed from 493 km (306 mi) during the first period to 1333 km (828 mi) during the new period. Consequently, the concessionaire administration costs were reduced. In actual practice, the system had a positive balance in the first two years, however since the government didn t allow the agreed toll rates increase, the system became 40
deficient. Resources from the Integrated Roadway System [SISVIAL Sistema Vial Integrado] and the Transportation Compensation System [SISCOTA Sistema de Compensaciones al Transporte] were required to reimburse the concessionaires. Corridor Extension (km) Concessionaire National Routes 1 1281 Rutas al Sur S.A. 3-205 226-252 2 1265 Autovía del Oeste S.A. 5-7 3 1523 Vial 3 S.A. 9-11 - A012-19 - 188 - A009 4 1239 Caminos de América 8-33 - 36-38 - 193 - A005 5 1528 Vial 5 S.A. 9-34 6 1164 EmCoVial S.A. 11-12 - 16 Total 8,000 Table 3-6. Corridors under concession 2003-2010. Source (Gonzalez & Bortolín, 2014) 3.2.2.3 Highway Concessions 2010 2016 During this period, the concessionaires are responsible for the maintenance, operation and administration of the toll roads as well as executing rehabilitation works, safety improvements and adding capacity. This was all specified in the bidding process that, because of the magnitude of these works, attracted companies and guaranteed infrastructural improvements which were then paid when finished, like any other government hired highway project. Low tolls were maintained and consequently the federal government continued to provide large subsidies in order to create balance in the system. In addition, new corridors were included in the bidding process. 41
Corridor Extension (km) Concessionaire National Routes 1 1290 CV1 Concesionaria Vial S.A. 3-205 - 226-252 - 22-151 2 769 Corredor de Integración Pampeana S.A. 5-188 3 724 Aautovía Bs. As. a Los Andes S.A. 7 4 1001 Carreteras Centrales de Argentina S.A. 19-38 - 34-18 5 1336 Cinco Vial S.A. 9-11 - A009 - A012-193 6 934 Caminos del Paraná S.A. 12-16 7 798 VialNOA S.A. 9-34 8 922 Corredor Central S.A. 8-33 - 36 - A005 18 677 Caminos del Río Uruguay S.A. 12-14 - 135 - A015-117 - 174 H5 252 H 5 S.A. 5 Total 8,703 Table 3-7. Corridors under concession 2010-2016. Source (Gonzalez & Bortolín, 2014) 42
Figure 3-8. Roadway Network under concession. Source (OCCOVI, 2016). 43
3.2.3 ROADWAY INDICATORS It is evident that when analyzing Argentina s National and Provincial Network, it is possible to determine that the paved proportion is similar to that of other countries like Mexico and Canada. Furthermore, this index is over the average of other countries in Latin America and the Caribbean [LAC]. However, if the network extension per surface index is examined, Argentina is still far from the average LAC values. If only the paved system is considered, the values are closer to the LAC average but still far from developed countries like Canada or Australia, even further from USA or France. Regarding the network density per inhabitants and GDP, the values are similar to those observed in LAC; nevertheless, if the vehicle fleet is considered the value is below average. If a similar study is performed for the different provinces in Argentina, the conclusions are not compelling. In fact, many inconsistencies are observed as very poor provinces present the best indexes while its roadway infrastructure is far from being in good conditions. Surface Paved / Network Paved Paved Access Country (million Surface (Km) (Km) (%) Km 2 ) (Km/Km 2 Index ) Argentina 215,471 2 63,348 29.4% 2.780 3 0.023 21.9 France 849,000 849,000 100.0% 0.552 1.538 0.3 USA 6,304,193 3,706,865 58.8% 9.629 0.385 1.3 Mexico 329,532 108,086 32.8% 1.958 0.055 9.1 Brasil 1,724,929 94,871 5.5% 8.547 0.011 45 Australia 811,603 314,090 38.7% 7.741 0.041 12.3 Canada 901,903 318,372 35.3% 9.971 0.032 15.7 Table 3-8. World Development Indicators 4. Source (World Bank, 2002) 2 National and Provincial Network. 3 Argentine portion of the Antarctica not included. 4 Transport indicators such as Total road network or Paved roads are no longer published by the WB. 44
Index Argentina Average LAC Network Paved Proportion (%) 30% 21.80% Network Extension / Surface (Km/Km 2 ) 0.08 0.16 Network Paved Extension / Surface (Paved Km/Km 2 ) 0.024 0.03 Network Extension (Km) / 1,000 Inhabitants 5.71 5.1 Network Extension (Km) / 1,000,000 GDP 0.62 0.6 Network Extension (Km) / 1,000 Vehicles 18.66 29.33 Table 3-9. Roadway Network Indicators: Argentina vs LAC. Source (CAF, 2011) Province Network (Km) Surface (km 2 ) Population 2010 (Inhabitants) Network (Km) / Surface (Km 2 ) Density Network (Km) / 1,000 Inhabitant Buenos Aires 40,095 307,771 18,515,235 0.13 2.17 Catamarca 4,614 102,602 367,828 0.04 12.54 Córdoba 19,332 99,633 1,055,259 0.19 18.32 Corrientes 7,828 224,686 509,108 0.03 15.38 Chaco 7,148 165,321 3,308,876 0.04 2.16 Chubut 8,398 88,199 992,595 0.10 8.46 Entre Ríos 14,802 78,781 1,235,994 0.19 11.98 Formosa 4,076 72,066 530,162 0.06 7.69 Jujuy 4,684 53,219 673,307 0.09 6.96 La Pampa 9,801 143,440 318,951 0.07 30.73 La Rioja 5,915 89,680 333,642 0.07 17.73 Mendoza 15,980 148,827 1,738,929 0.11 9.19 Misiones 3,749 29,801 1,101,593 0.13 3.40 Neuquén 8,446 94,078 551,266 0.09 15.32 Rio Negro 8,719 203,013 638,645 0.04 13.65 Salta 9,122 155,488 1,214,441 0.06 7.51 San Juan 5,737 89,651 681,055 0.06 8.42 San Luis 9,424 76,748 432,310 0.12 21.80 Santa Cruz 10,166 243,943 273,964 0.04 37.11 Santa Fe 15,488 133,007 3,194,537 0.12 4.85 Santiago del Estero 20,537 136,351 874,006 0.15 23.50 Tierra del Fuego 1,383 5,544 127,205 0.25 10.87 Tucumán 3,043 22,524 1,448,188 0.14 2.10 Total 238,487 2,764,373 40,117,096 0.09 5.94 Table 3-10. Argentina Provinces Roadway Network Indicators. Based on (CVF, 2013) and (CVF, 2014) 45
3.3 Public Transportation Most of Argentina s population uses public transportation to travel. Private companies are licensed to run the operation, yet the service is highly subsidized in order to keep fares affordable. In some cases, revenues do not cover more than 10% of the operative expenses. In AMBA the estimate is that out of 22 million daily trips made, 60% are on public transportation. Even though this is a significant proportion compared to other cities, these values have been declining as a result of the constant car fleet increase since 1970 (Agosta R., 2011). This was mainly due to growing low density structures in the suburban areas of the AMBA. These areas are characterized by people with high acquisitive power that depend on their private cars exclusively, as well as by lower income families that have very poor access to public transportation. 3.3.1 RAILWAY SYSTEM Argentina's rail network has approximately 34,569 kilometers (21,480 mi) distributed between freight, intercity, urban, and touristic services. According to CNRT data, the largest railway network share is used for freight services (82.5% of the total), followed by long distance services with 11.5%. Finally, urban services (concentrated exclusively in AMBA) represent 4.6% of the total length, while only 1.4% is used for tourism operations. The network used for freight services has a total length of 28,527 km (17,726 mi) and is composed of six railway routes. Three of them are under concession (46.3% of the total railway track) and are operated by private companies: Nuevo Central Argentina SA [NCA], Ferroexpreso Pampeano SA [FEPSA], and Ferrosur Roca SA. The remaining 46
routes, about a 53.7%, are operated by BCyL limited state enterprise (FCGS, FCGU, and FCGB). Service Extension (km) Percentage Touristic 483 1.4% Urban 1,582 4.6% Intercity 3,977 11.5% Freight 28,527 82.5% Total 34,569 100.00% Table 3-11. Railway Network. Source (CNRT Statistics, 2016) Service Extension (km) Percentage Freight 28,527 100.0% NCA 4,750 16.7% FEPSA 5,094 17.9% Ferrosur Roca SA 3,378 11.8% FCGSM 5,254 18.4% FCGU 2,704 9.5% FCGB 7,347 25.8% Table 3-12. Freight services. Source (CNRT Statistics, 2016) The rail network for urban services in AMBA has a total length of 1,582 km (983 mi) under concession. This network is composed of seven Regional Rail lines [RGR] extending radially from the central stations in CABA to suburban municipalities, exceeding in some cases distances of 100 km (62 mi). In addition, within CABA s limits exclusively, there is an underground Rapid Rail Transit network [RRT] composed of 6 lines with an extension of approximately 61 km (38 mi). 47
Figure 3-9. RGR network in the AMBA. Source (CNRT Map, 2016) Service Extension (km) Percentage Urban 1,582 100.0% Mitre 322 20.3% Sarmiento 301 19.0% Urquiza 55 3.5% Roca 449 28.4% San Martín 175 11.0% Belgrano Norte 107 6.7% Belgrano Sur 113 7.2% RRT 61 3.9% Table 3-13. Urban services in the AMBA. Based on (CNRT Statistics, 2016) 48
Figure 3-10. RRT network in the CABA. Source (GCBA Map, 2016). In addition, there are three other railway lines mainly serving tourism: Tren de la Costa in the suburban north area of the AMBA (Light Rail Transit operated in the north AMBA region by the federal government), La Trochita (Streetcars operated by the province of Río Negro), and Tren de las Nubes (Streetcars operated by the the province of Salta). 49
In 2011 a total of 24.2 million tons of cargo and 657 million passengers were transported using this infrastructure. However, in 2014, only 19.3 million tons of cargo were moved and 508 million passengers were transported. Almost all of them used the RRT and the RGR network in AMBA. In 2014, about 99.5% of the rail passengers corresponded to AMBA (which accounts for 28.5% of passenger s railway track) while the remaining 0.5% corresponded to the intercity or long distance network (which represents 71.5% of the passenger railway track). Service Extension (km) Percentage Passengers 5 Percentage Urban 1,582 28.5% 507,669,076 99.5% Intercity 3,977 71.5% 2,355,019 0.5% Total 5,559 100.00% 510,024,095 100.00% Table 3-14. Urban and Intercity services. Based on (CNRT Statistics, 2016) 5 These values correspond to the urban and intercity rail passengers of 2014. 50
Figure 3-11. National Railway Network. 51
3.3.2 BUS SYSTEM The public transportation system in Argentina is also supplemented by 276 bus routes operated by more than 70 private companies with a fleet that exceeds 15 thousand units. About 124 of the bus routes (45% of the total) correspond to AMBA, while 94 are provincial (34%) and 58 are municipal (21%) (Ministry of Transportation, 2016). Figure 3-12. Metrobus 9 de Julio. 52
In past years, in order to reduce bus travel times, the mayor of CABA developed Metrobus, which is a 56.8 km (35.3 mi) network of dedicated separated lanes and stations for buses. Designed as a Bus Rapid Transit [BRT] system, it mixes a few bi-articulated buses with conventional buses. The headway as well as the bus lines that operate the system are the same as before its implementation. There are currently six Metrobus systems in CABA: Juan B. Justo, 9 de Julio, Sur, Norte, San Martín, Autopista 25 de Mayo, San Martín (GCBA Metrobus, 2016). In addition, there are approximately 34 private companies that provide long distance bus services, connecting more than 1,800 domestic destinations, as well as six countries in South America: Bolivia, Brazil, Chile, Paraguay, Peru and Uruguay. These bus services connect 900 cities with more than 10,000 inhabitants, promoting integration between provinces and regional economic development; with over 64 million passengers a year, buses transport about 90% of long-distance passengers using public transport (Ministry of Transportation, 2016). 3.3.3 OTHER SYSTEMS The public transport system is supplemented with about 40 thousand taxis, 6 thousand private cars and more than a thousand vans and minibus vehicles. In the past years, an extensive network of bike lanes has been developed in the most important cities of the country, such as CABA (with 150 km of bike lanes), Rosario, Mendoza, among others. 53
Figure 3-13. Bike lanes network in the CABA. Source (GCBA Bike Lanes, 2016). 54
4. GOVERNMENT REVENUE 4.1 Introduction In Argentina, revenue is raised by the national, provincial and municipal governments, mainly through income, assets and consumption taxes. Argentina does not have a "revenue code"; the different tax categories are governed by separate laws, which are amended frequently (Undersecretariat for Investment, Development, and Trade Promotion, 2014). At a national level, the Federal Administration of Public Revenue [AFIP Administración Federal de Ingresos Públicos], a self-governing entity that reports to the MEPF, is responsible for tax levy, collection and monitoring. The Federal Government collects income taxes, personal assets taxes, VAT, and excise taxes throughout the country and distributes a specific share of each, which is agreed upon beforehand, to each of the provinces. Moreover, the Government of the Autonomous City of Buenos Aires [GCBA Gobierno de la Ciudad de Buenos Aires] and most of the provinces have an agreement that attempts to protect organizations with activities in more than one jurisdiction, from multiple taxation that may result from the substantial Gross Receipts Taxes (Secretariat of Public Revenues [SIP - Secretaría de Ingresos Públicos], 2016). Each of the 23 provinces, and the GCBA, have the right to issue their own tax laws directed at certain economic activities within its jurisdiction. The most important of these taxes are those relating to real estate, local consumption, local improvements, estates, and internal commerce and production. They include gross income and stamp taxes as well as 55
vehicle licenses. In addition, some provinces enforce entertainment, lottery, agricultural, public health and electricity taxes, and collect them through their own provincial tax office. CABA is separate from the provinces and has its own Constitution. The city collects its own taxes, the most important of which is the gross receipts tax. Rates are fixed annually by the City Legislature, in the Tariff Ordinance which must be published in the Official Gazette. Controversies involving taxpayers and CABA are handled through the city s General Revenue Administration. Since the National Tax Court does not take part in local affairs, appeals must be made directly to the judicial courts but will only be heard after the tax has been paid. Municipalities are empowered under provincial constitutions to develop their own affairs and are authorized to impose a wide variety of taxes (such as utility and license taxes) by statutes enacted by their councils. Many of them have also imposed taxes that are exactly the same as the provincial Gross Income Taxes (Secretariat of Public Revenues [SIP - Secretaría de Ingresos Públicos], 2016). 4.2 Revenue streams for National Administration For the federal government to function, public revenue is collected from different sources which, according to the Public Account summary reports [Cuenta de Inversión] produced by the National Accounting Office [CGN - Contaduría General de la Nación], can be classified under the following categories (it is important to point out that these reports summarize only the resources that would be used by the National Administration): 56
I a b c d e f g II a b c Concept Current Revenue Tax Revenue Non-Tax Revenue Contributions to Social Security Sales of Goods and Services of Public Administration Operation incomes Return on Property Current Transfers Capital Resources Own Capital Resources Transfer to Capital Decrease of Financial Investment Table 4-1. Revenue sources. Source (CGN, 2014) Analyzing the 2014 reports, it is possible to see that the Current Revenue (99.8%) represents almost the full amount collected by the National Treasury [TN Tesoro Nacional], whereas Capital Resources have a minor influence (0.2%). Among the Current revenue category, Tax revenue (56.2%) and the Contributions to Social Security (27.7%) represent the most important revenue streams for the federal government. On the other hand, Return on Property (12.9%), Non-Tax Revenue (2.6%), Sales of Goods and Services of Public Administration (0.4%), Current Transfer (0.04%), and Operation Incomes (0.0%) are categories of minor importance. 57
Figure 4-1. Current Revenue (2014). Based on (CGN Data, 2003-2014) 58
Revenue (in million ARS) Concept 2003 2004 2005 2006 2007 2008 I Current Revenue 57,537.3 72,428.7 87,771.6 111,370.9 146,723.3 199,170.9 Current Revenue / GDP 12.86% 13.52% 13.56% 13.77% 14.28% 15.51% a Tax Revenue 42,709.9 57,894.3 70,443.5 85,361.8 103,433.1 142,803.1 b Non-Tax Revenue 1,463.4 1,707.4 2,126.8 2,710.5 3,269.3 3,863.4 c Contributions to Social Security 8,801.1 10,834.4 13,736.7 19,520.3 36,287.2 44,239.5 d Sales of Goods and Services of Public Administration 307.0 408.8 514.2 622.4 760.5 917.2 e Operation incomes 0.0 0.0 0.0 0.0 0.0 0.0 f Return on Property 4,058.1 1,300.5 562.8 2,577.5 2,467.4 6,928.4 g Current Transfers 197.8 283.3 387.6 578.5 505.8 419.5 II Capital Resources 196.0 660.3 1,107.0 1,196.6 741.7 927.8 Capital Resources / GDP 0.04% 0.12% 0.17% 0.15% 0.07% 0.07% a Own Capital Resources 15.8 17.0 20.9 34.7 45.7 67.7 b Transfer to Capital 152.1 610.8 1,014.3 915.3 516.7 827.5 c Decrease of Financial Investment 28.1 32.5 71.7 246.7 179.3 32.7 I + II Total Revenue 57,733.3 73,089.0 88,878.6 112,567.5 147,464.9 200,098.8 Total Revenue / GDP 12.91% 13.64% 13.73% 13.92% 14.35% 15.59% Table 4-2. Revenue sources in million ARS (2003-2008). Based on (CGN Data, 2003-2014) 59
Revenue (in million ARS) Concept 2009 2010 2011 2012 2013 2014 I Current Revenue 238,210.0 325,147.9 404,720.5 511,350.1 664,527.6 942,608.2 Current Revenue / GDP 16.88% 17.96% 17.51% 18.49% 19.51% 21.30% a Tax Revenue 142,365.9 198,139.1 256,391.3 316,545.1 385,181.8 530,826.1 b Non-Tax Revenue 4,638.6 6,288.7 8,118.4 9,887.1 13,848.2 24,532.2 c Contributions to Social Security 65,716.0 87,404.7 116,690.9 152,294.8 201,153.5 261,232.2 d Sales of Goods and Services of Public Administration 1,151.8 1,447.4 1,591.5 1,878.5 2,580.8 3,606.7 e Operation incomes 0.0 0.0 0.0 0.0 0.0 0.0 f Return on Property 14,365.7 30,770.6 21,640.4 30,425.8 61,286.8 122,013.1 g Current Transfers 9,972.1 1,097.4 288.0 318.8 476.5 397.8 II Capital Resources 2,275.4 2,006.1 2,614.1 1,410.5 1,349.2 1,569.8 Capital Resources / GDP 0.16% 0.11% 0.11% 0.05% 0.04% 0.04% a Own Capital Resources 32.5 33.3 39.2 30.6 8.6 13.8 b Transfer to Capital 2,015.3 1,856.0 2,557.4 1,260.3 1,260.3 1,374.5 c Decrease of Financial Investment 227.6 116.8 17.5 119.6 80.3 181.6 I + II Total Revenue 240,485.4 327,154.0 407,334.6 512,760.6 665,876.8 944,178.0 Total Revenue / GDP 17.04% 18.07% 17.62% 18.54% 19.55% 21.33% Table 4-3. Revenue sources in million ARS (2009-2014). Based on (CGN Data, 2003-2014) 60
Figure 4-2. Current Revenue in million ARS (2003-2014). Based on (CGN Data, 2003-2014) 61
The Tax Revenue category can be divided into twelve (12) subcategories described below. a Concept Tax revenue 1 Income Tax 2 Minimum Presumed Income Tax 3 Personal Assets Tax 4 Value Added Tax 5 Internal Tax 6 Fuel Tax 7 Tax on Debit and Credits on Checking Accounts 8 Electric Energy Consumption Tax 9 Import Duties 10 Export Duties 11 Statistic Tax 12 Other Taxes Table 4-4. Tax Revenue. Source (CGN, 2014) The 2014 reports show that the VAT (30.2%), the Income Tax (26.4%), the Export Duties (15.2), the Tax on Debit and Credits on Checking Accounts (12.1%), and the Import Duties (5.4) represent almost the full amount (89.3%) of revenue collected by the TN with taxes. The Fuel Tax represents only 3.2% and, as described in the following sections, this tax is distributed among different actors providing the federal government only a small portion of these resources. 62
Figure 4-3. Tax Revenue (2014). Based on (CGN Data, 2003-2014) 63
Tax Revenue (in million ARS) Concept 2003 2004 2005 2006 2007 2008 a Tax Revenue 42,709.9 57,894.3 70,443.5 85,361.8 103,433.1 142,803.1 Tax Revenue / GDP 9.55% 10.80% 10.88% 10.56% 10.07% 11.12% 1 Income Tax 9,676.8 14,764.8 18,702.0 22,508.0 22,309.9 28,073.4 2 Minimum Presumed Income Tax 671.6 599.9 544.4 537.1 619.8 471.6 3 Personal Assets Tax 702.2 733.2 797.4 927.5 938.7 1,304.0 4 Value Added Tax 9,844.1 14,877.8 18,236.1 23,364.7 30,747.4 38,898.8 5 Internal Tax 1,154.4 1,558.0 1,884.8 2,065.1 2,351.2 2,719.7 6 Fuel Tax 3,072.5 3,292.1 3,591.3 3,939.1 3,275.8 4,061.5 7 Tax on Debit and Credits on Checking Accounts 4,933.3 6,497.8 7,990.8 9,799.6 12,661.4 16,643.1 8 Electric Energy Consumption Tax 205.6 251.9 270.5 447.3 497.8 522.9 9 Import Duties 2,155.1 3,062.1 3,664.4 4,865.6 6,649.3 8,612.0 10 Export Duties 8,446.1 9,728.1 11,626.5 13,134.3 18,579.0 35,195.1 11 Statistic Tax 57.3 75.1 86.9 109.3 140.0 161.8 12 Other Taxes 1,790.8 2,453.6 3,048.5 3,664.1 4,662.8 6,139.2 Table 4-5. Tax Revenue in million ARS (2003-2008). Based on (CGN Data, 2003-2014) 64
Tax Revenue (in million ARS) Concept 2009 2010 2011 2012 2013 2014 a Tax Revenue 142,365.9 198,139.1 256,391.3 316,545.1 385,181.8 530,826.1 Tax Revenue / GDP 10.09% 10.94% 11.09% 11.45% 11.31% 11.99% 1 Income Tax 29,039.0 40,090.6 56,622.1 72,519.5 96,217.5 140,282.1 2 Minimum Presumed Income Tax 577.9 782.0 642.4 686.3 822.7 1,088.7 3 Personal Assets Tax 1,561.4 1,986.7 2,273.6 2,803.4 3,973.5 5,536.1 4 Value Added Tax 42,751.8 57,119.7 74,420.2 94,565.3 122,154.5 160,076.2 5 Internal Tax 3,232.0 4,599.6 5,284.5 6,360.4 7,791.2 10,797.4 6 Fuel Tax 4,903.1 6,398.6 7,569.4 10,881.4 12,165.2 17,046.7 7 Tax on Debit and Credits on Checking Accounts 17,351.3 22,674.5 30,513.3 36,926.8 47,569.3 64,050.5 8 Electric Energy Consumption Tax 538.1 592.4 630.3 646.5 624.9 716.9 9 Import Duties 7,311.5 10,860.2 13,924.2 15,803.6 22,458.4 28,613.9 10 Export Duties 28,271.0 44,375.1 53,262.0 61,455.5 54,553.5 80,855.4 11 Statistic Tax 172.4 243.0 300.6 323.5 411.9 569.5 12 Other Taxes 6,656.4 8,416.7 10,948.8 13,572.9 16,439.1 21,192.7 Table 4-6. Tax Revenue in million ARS (2009-2014). Based on (CGN Data, 2003-2014) 65
Figure 4-4. Tax Revenue in million ARS (2003-2014). Based on (CGN Data, 2003-2014). 66
4.3 Tax Revenue at federal and provincial level Among the different tax revenue sources, there are some that are distributed among different provinces, others that are exclusively managed by the national government, and others which must be used for specific purposes (DNIAF, 2015). Thus, the total tax revenue collected by the federal government could be classified in other three categories depending on how these resources are going to be assigned and spent. A I II B C Tax Revenue Classification Shared Taxes General distribution Specific distribution Non-Shared Taxes Specifically assigned Taxes Table 4-7. Revenue sources. Based on (DNIAF, 2015). 4.3.1 SHARED (CO-PARTICIPATED) TAXES According to Law 25570 ( Ley de Coparticipación Federal de Recursos Fiscales ), which was updated in 2002, tax revenue must be distributed in the following way, unless otherwise stated: 42.34% goes to the National Treasury. Nonetheless, 0.70% is distributed among the provinces of Tierra del Fuego, Antártida e Islas del Atlántico Sur (Decree 702/1999) and 3.75% goes to CABA (Decree 194/2016) (previously 1.40% according to Decree 705/2003), meaning only 37.89% reached the TN. 56.66% goes to the provinces (these are known as automatic transferals). These resources are distributed among the provinces as described in Table 4-8. 67
Province Percentage Buenos Aires 19.93% Catamarca 2.86% Córdoba 9.22% Corrientes 3.86% Chaco 5.18% Chubut 1.38% Entre Ríos 5.07% Formosa 3.78% Jujuy 2.95% La Pampa 1.95% La Rioja 2.15% Mendoza 4.33% Misiones 3.43% Neuquén 1.54% Rio Negro 2.62% Salta 3.98% San Juan 3.51% San Luis 2.37% Santa Cruz 1.38% Santa Fe 9.28% Santiago del Estero 4.29% Tucumán 4.94% Total 100% Table 4-8. Distribution among the different provinces. Source: (Law 25570). 2% goes to the provinces of Buenos Aires, Chubut, Neuquén, and Santa Cruz to restore their relative level with other provinces. 68
Province Percentage Buenos Aires 1.5701% Chubut 0.1433% Neuquen 0.1433% Santa Cruz 0.1433% Table 4-9. Distribution. Source: (Law 25570). 1 % to the MIT as Funds Contributed to the Provinces by The National Treasury [ATN - Fondo de Aportes del Tesoro Nacional a las Provincias ] According to Law 24130 (1992) and Law 26078 (2005), the national government withholds the following resources from the portion of the shareable taxes: 15% to pay social security contributions and other operatational costs. The monthly sum of ARS 43.8 million, is to be distributed among the provinces in order to cover fiscal imbalances. In addition, some taxes have a specific distribution mechanism that is different to what was previously established: Income Tax. (Law 20628 and Law 26078) Value Added Tax (Law 23966 and Law 26078) Internal Shared Tax (Law 24674) Tax on the transfer of physical entities properties and undivided inheritance (Law 23905) Emergency Levy on certain Games Awards and Sport Contests (Law 20630 and Decree 668/1974) Co-op Capitals Tax (Laws 23427, 23658, 23760, 25239 and Law 25791) Minimum Presumed Income Tax (Law 25063) Tax on Debit and Credits on Checking Accounts (Law 25413) 69
4.3.2 NON-SHARED TAXES There is only one tax that is exclusively for the TN and is not shared with the provinces: Export Duties (Decree 2275/1994 and Resolution 11/2002). 4.3.3 SPECIFICALLY ASSIGNED TAXES Finally, there are some taxes that have a specific assignment. Statistic Tax (Laws 23664, 23697, 26337, and Decree 740/2014) Import Duties (Decree 2275/1994, Resolution 11/2002, Laws 26337, 26422, 26546, 26895, and Law 27008). Liquid Fuels and Natural Gas Tax (Law 23966 Title III Chapter IV, Law 24699 Article 2, and Law 26078). Electric Energy Consumption Tax (Law 23681, Law 24065, and Law 26078) Gasoil and Liquefied Natural Gas (LNG) for automotive use tax (Law 26028 and Law 26454) Surcharge over Natural Gas and Liquefied Petroleum Gas [LPG] (Law 25565). Transferal or import of gasoline and natural gas for CNG production Tax (Law 26181). Personal Assets Tax (Law 23966, and Law 26078) Recorded Videograms Tax (Law 17741, and Law 24377) Entertainment Film Tickets Tax (Law 17741, and 24377) Tobacco Special Fund (Law 19800) International Flight Tax (Law 25997) Emergency Additional on Cigarettes (Law 24625 and 26658) 70
Simplified Regime for Small Taxpayers, commonly known as Monotributo (Law 26545) Internal Taxes Diesel (Law Nº 24674). These resources are assigned to the ANSES. Internal Taxes Insurance (Law 24674). Audiovisual Communication Services Tax (Law 26522 and Decree 1225/2010) Cell Phone Plan Tax (Law 26573 and Decree 583/2010) 71
Revenue (in million ARS) Concept 2003 2004 2005 2006 2007 2008 Taxes (A) 51,270.3 71,895.7 86,734.7 106,565.1 136,982.6 173,189.6 Income Tax 14,750.7 22,289.1 28,045.4 33,615.1 42,854.9 53,646.0 VAT 20,947.6 30,976.9 36,853.1 47,104.3 62,669.3 80,228.9 Refunds (-) (1,367.2) (1,564.0) (1,885.0) (1,965.0) (1,912.5) (2,894.0) Internal shared taxes 2,223.0 3,028.2 3,657.4 4,091.8 4,717.5 5,617.3 Game awards Tax 47.2 36.6 41.4 55.3 61.7 80.4 Property transferal Tax 66.0 89.3 116.1 167.2 382.4 439.1 Minimum Presumed Income Tax 1,362.8 1,223.6 1,102.2 1,084.0 1,299.0 987.7 Co-op Capital Tax 0.0 0.0 54.6 58.7 65.5 70.9 Other shared taxes 70.1 76.7 15.3 9.0 8.7 5.4 Personal Assets Tax 1,602.8 1,661.0 1,812.7 2,076.7 2,492.0 3,375.0 Tax on Debit and Credits on Checking Accounts 5,900.2 7,681.9 9,434.3 11,685.7 15,065.0 19,495.2 Fuels Law 23966 - Gasoline 1,609.1 1,652.7 1,769.0 2,051.8 2,537.8 3,609.7 Fuels Law 23966 - Others 1,528.8 1,677.5 1,911.6 2,007.0 2,171.4 2,511.9 Other fuels 1,835.3 2,048.3 2,336.7 2,513.8 2,756.5 3,572.3 Monotributo 282.7 499.4 756.9 868.7 1,063.3 1,354.7 Additional on Cigarettes 256.3 343.4 392.1 398.2 447.1 555.1 Audiovisual Communication Services 95.3 115.5 140.0 162.3 204.6 229.4 Other taxes 59.6 59.6 180.7 580.3 98.5 304.6 Foreign Trade Taxes (B) 11,304.9 13,533.5 16,190.2 19,840.9 27,468.2 45,041.7 Import duties 2,228.2 3,168.4 3,780.3 5,018.6 6,859.2 8,803.3 Export duties 9,211.9 10,272.0 12,322.5 14,711.7 20,449.7 36,055.3 Statistic Tax (135.2) 93.2 87.3 110.6 159.2 183.1 Total Tax Revenue (A)+(B) 62,575.2 85,429.2 102,924.9 126,405.9 164,450.8 218,231.3 Contributions to Social Security (C) 9,668.3 12,662.4 16,327.5 23,602.8 35,330.4 51,143.8 Personal Contributions 4,692.3 6,375.0 8,003.7 10,730.8 14,322.6 23,242.6 Employer's Contributions 7,529.1 9,892.3 12,747.1 18,153.7 24,174.6 33,167.0 Other incomes 330.3 583.8 729.9 1,656.4 5,273.5 6,409.6 Others SIPA (-) (2,883.5) (4,188.8) (5,153.2) (6,938.1) (8,440.4) (11,675.4) Total Revenue (A)+(B)+(C) 72,243.5 98,091.6 119,252.4 150,008.7 199,781.2 269,375.1 Co-Participated (Gross) 30,327.0 44,505.9 54,525.9 67,846.4 89,014.5 111,642.3 Co-Participated (Net) 25,228.3 37,280.4 45,797.5 57,119.9 75,112.8 94,346.4 Budget Classification 72,243.5 98,284.7 119,252.4 150,008.7 199,781.2 269,375.1 National Administration 42,824.2 58,143.2 70,504.5 86,773.2 103,893.3 141,703.7 Contributions to Social Security 9,441.9 12,234.0 15,778.5 22,764.9 34,351.1 49,599.7 Provinces 16,220.0 23,144.6 28,128.2 34,717.2 54,676.4 68,809.0 Specifically Assigned 3,757.5 4,762.9 4,841.3 5,753.5 6,860.3 9,262.8 Table 4-10. Total Tax Revenue in million ARS (2003-2008). Based on (DNIAF Data, 2003-2014). 72
Revenue (in million ARS) Concept 2009 2010 2011 2012 2013 2014 Taxes (A) 189,445.7 252,847.0 337,073.8 426,253.4 550,049.8 758,031.8 Income Tax 55,552.3 76,651.6 108,597.9 138,439.6 183,598.7 267,075.1 VAT 87,385.7 116,386.0 154,236.9 190,496.4 249,006.3 331,202.8 Refunds (-) (2,451.0) (3,056.0) (4,690.0) (1,987.0) (5,393.9) (11,215.3) Internal shared taxes 6,718.0 9,474.4 10,914.3 12,912.0 16,365.9 22,341.1 Game awards Tax 113.6 121.6 157.3 215.3 354.1 436.0 Property transferal Tax 371.7 538.6 774.9 720.7 734.1 911.7 Minimum Presumed Income Tax 1,212.7 1,647.8 1,357.0 1,443.1 1,728.5 2,290.9 Co-op Capital Tax 81.8 101.0 125.8 145.3 175.0 219.6 Other shared taxes 6.7 5.0 5.0 9.1 6.5 5.0 Personal Assets Tax 4,041.1 5,146.8 5,891.9 7,262.7 10,296.2 14,355.6 Tax on Debit and Credits on Checking Accounts 20,561.5 26,884.7 36,179.4 43,931.2 56,514.8 76,739.8 Fuels Law 23966 - Gasoline 4,553.6 6,360.1 8,062.4 11,349.6 14,970.1 20,566.1 Fuels Law 23966 - Others 2,850.2 3,640.2 4,027.5 5,790.0 5,520.8 7,811.8 Other fuels 4,189.5 5,268.7 6,041.6 8,645.8 10,519.4 16,112.2 Monotributo 1,549.8 2,092.6 2,983.0 3,825.1 4,422.9 4,259.3 Additional on Cigarettes 658.4 786.0 1,026.3 1,197.0 1,392.3 2,013.3 Audiovisual Communication Services 343.7 404.7 535.0 680.3 874.5 1,293.4 Other taxes 1,706.5 393.1 847.8 1,177.1 (1,036.4) 1,613.4 Foreign Trade Taxes (B) 39,741.4 56,974.6 68,840.4 77,955.6 79,015.8 114,147.0 Import duties 7,525.6 11,182.6 14,372.6 16,312.6 23,134.4 29,482.3 Export duties 32,041.5 45,547.4 54,163.4 61,315.9 55,465.2 84,088.2 Statistic Tax 174.2 244.6 304.5 327.1 416.3 576.5 Total Tax Revenue (A)+(B) 229,187.1 309,821.6 405,914.3 504,209.1 629,065.6 872,178.8 Contributions to Social Security (C) 75,743.4 100,078.0 134,219.5 175,590.2 229,766.8 297,504.0 Personal Contributions 28,779.0 37,603.2 51,467.4 69,543.7 91,581.7 119,431.3 Employer's Contributions 40,886.6 54,656.0 75,314.3 101,039.4 133,549.7 173,511.0 Other incomes 6,931.7 8,883.6 8,949.7 7,168.5 7,828.8 10,122.3 Others SIPA (-) (853.9) (1,064.8) (1,512.0) (2,161.3) (3,193.3) (5,560.6) Total Revenue (A)+(B)+(C) 304,930.5 409,899.6 540,133.8 679,799.3 858,832.4 1,169,682.7 Co-Participated (Gross) 121,757.3 163,545.4 218,611.2 274,934.4 358,157.7 487,806.4 Co-Participated (Net) 102,944.1 138,464.0 185,269.9 233,144.6 303,884.4 414,085.8 Budget Classification 304,930.5 409,899.6 540,133.8 679,799.3 858,832.4 1,169,682.7 National Administration 145,487.8 197,676.8 257,305.3 315,783.9 384,177.3 534,712.1 Contributions to Social Security 73,644.8 97,279.1 129,775.9 169,174.5 222,127.5 286,950.5 Provinces 75,155.3 100,989.4 134,855.0 170,199.4 222,416.7 304,783.0 Specifically Assigned 10,642.6 13,954.3 18,197.6 24,641.5 30,111.0 43,237.0 Table 4-11. Total Tax Revenue in million ARS (2009-2014). Based on (DNIAF Data, 2003-2014). 73
4.3.3.1 Liquid Fuel and Natural Gas Tax (Fuel Tax) This tax is imposed over gasoline, natural gasoline, solvents, turpentine, and any other product composed by a mix of hydrocarbons as defined in Decree 74/1998 (See Appendix C). Fuel Percentage ARS/liter Leaded Gasoline < 92 RON 70% 0.5375 Leaded Gasoline > 92 RON 62% 0.5375 Unleaded Gasoline < 92 RON 70% 0.5375 Unleaded Gasoline > 92 RON 62% 0.5375 Virgin Gasoline 62% 0.5375 Natural Gasoline 62% 0.5375 Solvent 62% 0.5375 Turpentine 62% 0.5375 Gasoil 19% 0.15 Diesel-oil 19% 0.15 Kerosene 19% 0.15 Fuel Percentage ARS/m 3 CNG 16% - Table 4-12. Liquid Fuels and Natural Gas Tax. Source (InfoLEG Law 23966, 1991) Its distribution is as follows: 21% to the National Social Security Administration [ANSES Administración Nacional de la Seguridad Social] 79% is divided between the National Treasury [TN Tesoro Nacional] (29%), the provinces (29%), and the Housing National Fund [FONAVI - Fondo Nacional de la Vivienda] (42%). Of the 29% transferred to provinces, 60% must be assigned to the different DPVs (Roadways Funds) according to a distribution enforced by the Federal Roadway Council 74
[CVF - Consejo Vial Federal] (Decree 505/1958), 30% will go to the provinces and must be spent between public works and electric energy infrastructure, and 10% to the Provinces Special Fund for the Electric Development [FEDEI Fondo Especial de Desarrollo Eléctrico del Interior] The tax levied over gasoil, diesel-oil, kerosene and compressed natural gas (CNG) goes to the ANSES. Fuel Tax - Gasoline Distribution (2008-2014) Entity Percentage Level ANSES 21.000% National Administration TN 22.910% National Administration FEDEI 2.291% National Administration DPV 13.746% Provincial Administration Province 6.873% Provincial Administration FONAVI 33.180% Provincial Administration Total 100.000% Table 4-13. Liquid Fuels and Natural Gas Tax Gasoline Distribution. Fuel Tax - Others Distribution (2008-2014) Entity Percentage Level ANSES 100.000% National Administration Total 100.000% Table 4-14. Liquid Fuels and Natural Gas Tax Others Distribution. 75
Revenue (in million ARS) Concept 2008 2009 2010 2011 2012 2013 2014 Fuel Tax - Law 23966 6,121.6 7,403.8 10,000.3 12,089.9 17,139.6 20,490.9 28,377.9 Fuel Tax - Law 23966 / GDP 0.48% 0.52% 0.55% 0.52% 0.62% 0.60% 0.64% Gasoline 3,609.7 4,553.6 6,360.1 8,062.4 11,349.6 14,970.1 20,566.1 Others 2,511.9 2,850.2 3,640.2 4,027.5 5,790.0 5,520.8 7,811.8 Distribution National Administration 4,179.6 4,954.0 6,578.6 7,752.4 11,033.6 12,437.2 17,313.5 ANSES 3,269.9 3,806.5 4,975.8 5,720.6 8,173.4 8,664.5 12,130.7 TN 827.0 1,043.2 1,457.1 1,847.1 2,600.2 3,429.7 4,711.7 FEDEI 82.7 104.3 145.7 184.7 260.0 343.0 471.2 Provincial Administration 1,942.0 2,449.8 3,421.7 4,337.5 6,106.0 8,053.8 11,064.4 DPV 496.2 625.9 874.3 1,108.3 1,560.1 2,057.8 2,827.0 Province 248.1 313.0 437.1 554.1 780.1 1,028.9 1,413.5 FONAVI 1,197.7 1,510.9 2,110.3 2,675.1 3,765.8 4,967.1 6,823.8 Table 4-15. Liquid Fuels and Natural Gas Tax Revenue & Distribution. 4.3.3.2 Gasoil and LNG for automotive use tax (Gasoil Tax) A 22% tax is additionally charged to gasoil and LNG expenditures for automotive uses. It is distributed as follows: 20.20% goes exclusively to a specific trust fund of the Transportation Infrastructure System Trust Fund [SIT Sistema de Infraestructura del Transporte] according to Decree 976/2001, and the modifications introduced in Decree 652/2002, Decree 301/2004 and the distribution established in Decree 868/2013. 1.80% to compensate the automotive public transportation passenger fares in the urban and suburban areas under municipal and provincial jurisdiction, excluding CABA and AMBA. 76
4.3.3.3 Transferal or import of gasoline and natural gas for CNG production Tax (FIH Tax) The resources obtained through this tax are used for the Hydraulic Infrastructure Trust Fund [FIH Fideicomiso de Infraestructura Hídrica] and must be used to develop hydraulic infrastructure projects, works, maintenance and services, to recover productive areas, control and mitigate flooded areas and protect the highway and railway infrastructure. Fuel Percentage ARS/liter Leaded Gasoline < 92 RON 5% 0.05 Leaded Gasoline > 92 RON 5% 0.05 Unleaded Gasoline < 92 RON 5% 0.05 Unleaded Gasoline > 92 RON 5% 0.05 Fuel Percentage ARS/m 3 CNG 9% 0.05 Table 4-16. FIH Tax resources. Source (InfoLEG Law 26181, 2006). 4.4 Conclusions The Federal Government collects and distributes a certain share of the country s taxes to each province through a pre-established agreement, and any modification must be approved through a Decree or a Law. Currently, the only tax entirely dedicated to developing the national roadway network is the 22% tax over gasoil expenditure. In addition, only the 13.746% of the gasoline tax is used to finance the different DPVs. 77
As noted, the resources that should be funding transportation infrastructure, operation, and maintenance are currently used for other purposes. In fact, only 22.91% of the gasoline tax expenditure is available on the federal budget. The only positive aspect is that the fuel tax created in 1932 to provide resources for the DNV (Law 11658), nowadays has a minimum applicable value as well as a specific percentage, which means inflation cannot erode revenue. In countries that experience constant inflationary processes this is not something to be ignored. It is important to understand that Argentina s fiscal pressure has reached very high levels (about 35% of the GDP) and there is almost no room for new taxes and their implementation. 78
5. FUNDING GROUND BASED TRANSPORTATION 5.1 Introduction The aim of this chapter is to describe how Argentina s ground based transportation is funded. In order to provide recommendations to improve its roadway infrastructure it is important to understand how different funding sources are used and determine if they are sustainable through time. 5.2 Funding System Argentina s roadway system was developed using different funding sources which can be found during six unique periods (DNV Website, 2016). However, to develop most important infrastructures, funds were also received from the World Bank and the Inter- American Development Bank, among others. 1915 to 1932; 1932 to 1958; 1958 to 1979; 1979 to 1990; 1990 to 2001; 2001 to 2016. Between 1915 and 1932 the automobile became popular. Consequently, the first roadway network was developed, but executed without much planning. Railway companies funded the system through a mandatory contribution (Law 5315); approximately 3% of their earnings were dedicated to construct the primary roadway system. 79
In 1932, the DNV was created as well as different DPVs (Law 11658) and a federal fund was established by charging a fixed amount of gasoline sales. A portion of these resources were distributed between the provinces to expand and maintain the secondary roadway system. As a consequence of inflation, the currency purchase power depreciated, so these resources quickly became scarce. Therefore, the tax fuel, which at that time was a few cents per liter of gasoline, was replaced by a fixed percentage of 35% applied over the gasoline selling price (Decree 505/1958). (DNV Website, 2016) In 1960, a complementary federal fund was established with taxes on tires and vehicle sales (Law 15274) which allowed paving for most of the primary network. However, as inflation started to rise and the federal government required more resources to cover expenditures, this fund was no longer exclusively used for roadway system development. As a result, from 1960 to 1990, the roadway network increased in length, but because of lack of maintenance, presented worsened conditions. In 1990, DNV started to receive its funds from the yearly federal budget. In addition, about 9 thousand km were given to private companies into concession to alleviate the public sector s expenses and responsibilities. In 2001, the Transportation Infrastructure System [SIT Sistema de Infraestructura de Transporte] and a trust [Fondo Fiduciario del Sistema de Infraestructura del Transporte] were created with funds generated by gasoil fuels tax and a road fee (Decree 802/2001), in order to finance the roadway and railway infrastructure. The SIT was initially constituted by the Integrated Roadway System [SISVIAL Sistema Vial Integrado] and the Integrated Railway System [SIFER Sistema Ferroviario Integrado]: about 80% of the resources were distributed to improve roads and 20% rails. 80
Soon after, the Integrated Ground Transportation System [SITRANS Sistema Integrado de Transporte Terrestre], which included the SIFER and the Automotive Transportation System [SISTAU Sistema de Transporte Automotor], was created. At that time the SISFER resources were not only available to improve the railway infrastructure but also to subsidize railway companies operations. Likewise, the SISTAU was created to subsidize the automotive public transportation companies operations. Figure 5-1. SIT Structure (2004-2014). Based on (InfoLEG Decree 1377, 2001), (InfoLEG Decree 652, 2002), (InfoLEG Resolution 543, 2003), and (InfoLEG Decree 301, 2004) In 2004, the Transportation Compensation System [SISCOTA Sistema de Compensaciones al Transporte] was included into the SITRANS in order to subsidize the 81
tolls users and freight companies had to pay to use the roadway network. Thus, the SITRANS was ultimately formed by the SIFER, SISTAU and SISCOTA. In the following years, others account have been included in SIT, and resource allocation has been modified constantly, making the distribution of money much more difficult to understand; however, this could be considered the trust fund s backbone structure. 5.2.1 SIT RESOURCES The SIT structure changed with different resolutions and decrees; it currently presents a cryptic structure that is very difficult to explain in detail (in partly because the data available to the public is not clearly itemized). However, by analyzing the UCOFIN data it is possible to examine the SIT resources and expenses executed by its main accounts: SISVIAL and SIFER. From 2003 to 2007, most SIT resources came from the gasoil tax and road fee collected by AFIP; in 2008, these resources were similar to the resources transferred from the TN (ARS 2.7 billion and ARS 2.9 billion respectively). The same situation was experienced in 2009 (ARS 3.5 billion each); and from 2009 to 2014, these transferals to SIT have experienced an exponential increase of about six times. The federal budget resources are becoming essential for ground based transportation funding in Argentina as the government has decided to subsidize the operation in these past years. At the same time, the resources provided directly by AFIP have reduced its participation, even though there was an increment between 2010 (when they reached their lower share) and 2014. In 2014, SIT resources represented ARS 35.4 billion (approximately 0.8% of the GDP). 82
Figure 5-2. SIT Resources (2003-2014). Based on (UCOFIN Resources, 2016). Year AFIP Resources SIT Resources (ARS in million) Earned National Other Interest Treasury SIT Resources Total / GDP 2003 1,267.2 10.1 0.0 0.0 1,277.3 0.29% 2004 1,737.3 9.0 0.0 0.0 1,746.3 0.33% 2005 1,988.9 14.5 0.0 0.0 2,003.3 0.31% 2006 1,929.5 4.2 464.0 0.0 2,397.8 0.30% 2007 2,251.6 0.0 1,645.8 0.0 3,897.4 0.38% 2008 2,926.8 20.0 2,736.2 0.0 5,683.0 0.44% 2009 3,469.9 64.2 3,475.3 2,800.0 9,809.4 0.69% 2010 4,431.1 35.9 5,995.9 2,200.0 12,662.9 0.70% 2011 4,984.4 54.3 11,066.7 2,009.8 18,115.1 0.78% 2012 7,192.4 66.3 14,814.8 1,266.7 23,340.2 0.84% 2013 8,917.8 116.5 14,179.8 452.7 23,666.8 0.69% 2014 13,786.2 266.2 19,217.1 2,145.3 35,414.7 0.80% Total 54,883.1 661.1 73,595.6 10,874.4 140,014.3 - Table 5-1. SIT Resources (2003-2014). Based on (UCOFIN Resources, 2016). 83
Figure 5-3. SIT Resources in % (2003-2014). Based on (UCOFIN Resources, 2016) SIT Expenses (ARS in million) Year RL SISVIAL SITRANS 2003 38.0 737.5 508.4 2004 87.1 857.3 891.4 2005 173.3 715.0 1,258.6 2006 176.7 667.5 1,744.5 2007 206.2 784.0 3,105.5 2008 258.4 966.0 4,681.8 2009 294.3 3,887.7 5,801.7 2010 372.7 4,293.6 8,434.6 2011 419.8 3,429.4 14,677.4 2012 605.0 4,191.4 18,977.1 2013 750.0 3,695.3 19,769.7 2014 1,159.5 5,429.4 29,680.3 Total 4,541.1 29,654.3 109,531.0 Table 5-2. SIT Expenses (2003-2014). Based on (UCOFIN Expenses, 2016). 84
Figure 5-4. SIT Expenses (2003-2014). Based on (UCOFIN Expenses, 2016). In addition, SISVIAL, which started with most SIT resources, has seen its importance fade in favor of SITRANS. At first, it was intended to use 77.6% of the resources to improve the road infrastructure through SISVIAL and use 19.4% for the rail infrastructure (3% remaining for the RL), however, since 2006, this distribution has been reversed. In 2014, SISVIAL managed only 15% of SIT resources (approximately ARS 1.2 billion). On the other hand, SITRANS received approximately 82% of the total funds (ARS 29.7 billion), which were distributed between the SIFER, SISTAU, and SISCOTA. SISTAU receives on average about 87% of the resources to subsidize the companies that provide passenger transportation in AMBA (almost 80%). SISCOTA receives the minimum, and SIFER has seen its participation reduced drastically. This could explain the lack of railway infrastructure improvements in Argentina; one of the many causes that left the sector in a crisis and concluded with the Once Station tragedy. 85
Year SISTAU Passengers SITRANS Expenses (ARS in million) SISTAU SISTAU Emergency SIFER SISCOTA SITRANS Cargo & REFOP SITRANS / GDP 2003 307.8 17.8 7.3 175.6 0.0 508.4 0.11% 2004 548.8 15.7 50.5 265.6 10.8 891.4 0.17% 2005 717.1 21.1 261.0 246.6 12.8 1,258.6 0.19% 2006 1,328.9 106.7 75.3 215.4 18.3 1,744.5 0.22% 2007 2,515.6 166.6 46.1 364.7 12.4 3,105.5 0.30% 2008 3,745.0 63.3 271.7 526.0 75.9 4,681.8 0.36% 2009 4,576.4 80.1 502.6 557.2 85.2 5,801.7 0.41% 2010 7,090.9 90.7 658.1 524.2 70.8 8,434.6 0.47% 2011 12,343.4 133.7 1,028.3 1,030.3 107.3 14,643.0 0.63% 2012 17,051.0 85.4 98.7 1,273.0 29.9 18,538.0 0.67% 2013 17,764.2 173.9 0.0 1,646.9 1.2 19,586.2 0.58% 2014 24,417.9 288.0 0.0 3,797.5 1.0 28,504.3 0.64% Total 92,406.9 1,242.9 2,999.5 10,623.0 425.6 107,698.0 - Table 5-3. SITRANS Expenses in ARS million (2003-2014). Based on (UCOFIN Expenses, 2016). Figure 5-5. SITRANS Expenses (2003-2014). Based on (UCOFIN Expenses, 2016) 86
In 2014, SISTAU passengers summarized ARS 24.4 billion, while SIFER only accounted for ARS 3.8 billion. Regarding the SISVIAL resources, on average almost 85% is used to execute roadway works, while only 2% is used to subsidize roadway corridors and 3% to assist the SISTAU account. As it was stated before, it is upsetting that these resources allocated to invest in the roadway network have been decreasing drastically during the past years. Year Transfers to SISTAU SISVIAL Expenses (ARS in million) Corridor Roadway Reimbursements Works SISVIAL SISVIAL / GDP 2003 0.0 303.4 120.2 423.6 0.09% 2004 0.0 38.5 630.3 668.8 0.12% 2005 65.0 32.0 921.4 1,018.4 0.16% 2006 121.4 30.1 905.2 1,056.7 0.13% 2007 137.9 28.0 483.3 649.2 0.06% 2008 158.6 39.5 858.7 1,056.9 0.08% 2009 184.8 32.2 2,824.6 3,041.7 0.22% 2010 243.1 36.6 2,700.7 2,980.4 0.16% 2011 301.7 36.8 3,278.2 3,616.6 0.16% 2012 344.0 26.5 2,176.0 2,546.5 0.09% 2013 495.0 2.1 1,659.5 2,156.6 0.06% 2014 720.0 0.0 1,976.1 2,696.1 0.06% Total 2,771.6 605.6 18,534.3 21,911.5 - Table 5-4. SISVIAL Expenses in ARS million (2003-2014). Based on (UCOFIN Expenses, 2016). In 2014, SISVIAL resources represented ARS 2.7 billion, of which almost ARS 2 billion were used for roadways works (approximately 11% of SISTAU passengers account, and 71% of the SIFER resources). Finally, it is interesting to see that in the past year not all SISVIAL resources were used. In 2014, approximately 64% of the funds were not used for roadway infrastructure projects or corridors reimbursement; the speculation is that these resources were used 87
within SIT. However, it is hard to say from the available data what the final destination of the resources was. Figure 5-6. SISVIAL Expenses (2003-2014). Based on (UCOFIN Expenses, 2016). SISVIAL (ARS in million) Year Resources Expenses Difference Percentage 2010 4,312.3 2,737.3 1,575.0 37% 2011 3,480.7 3,315.0 165.7 5% 2012 4,248.8 2,202.5 2,046.3 48% 2013 3,763.3 1,661.6 2,101.7 56% 2014 5,525.0 1,976.1 3,548.9 64% Total 21,329.9 11,892.4 9,437.5 - Table 5-5. SISVIAL Expenses in ARS million (2003-2014). Based on (UCOFIN Expenses, 2016). 88
5.2.2 SUBSIDIES As explained in the previous section, the SISTAU passengers account, which is responsible for subsidizing transportation companies in urban and suburban areas, takes most SIT resources. In 2014, SISTAU passengers accounted for ARS 24.4 billion out of ARS 35.4 billion (approximately 69% of the total SIT resources). As described by (Barbero, Castro, Abad, & Szenkman, 2011), (Szenkman & Castro, 2012), (Castro & Lotitto., 2014), and (ASAP, 2014), most transportation subsidies are concentrated in AMBA making it unbalanced for populations in other regions. In 2013, automotive passenger transportation services accounted for approximately 66.1% of the transportation subsidies, while railway passenger services represented 23%, Aerolineas Argentinas, the airline managed by the state, 10.3%. The remaining 0.6% was used to subsidize the RRT in the CABA (ASAP, 2014). As described below, subsidies represent almost 80% of total automotive public transportation companies incomes in AMBA. Figure 5-7. Accumulated subsidies in transportation per jurisdiction 2002-2010. Source (Barbero, Castro, Abad, & Szenkman, 2011). 89
Figure 5-8. Transportation subsidies expenses per resident per jurisdiction in 2010 ARS. Source (Barbero, Castro, Abad, & Szenkman, 2011). Figure 5-9. Total incomes, subsidies, and average fare per automotive public transportation in the AMBA. Period 2003-2013 (in 2004 ARS). Source (ASAP, 2014). 90
Figure 5-10. Revenue vs Subsidies for the automotive public transportation companies in the AMBA. Source (ASAP, 2014). 5.2.3 DNV RESOURCES As explained in previous sections, DNV receives funds from the federal budget each year in order to develop and maintain the national roadway system. The total DNV expenditures were approximately ARS 10,519 million in 2010, and increased to ARS 20,364 million in 2014. However, in terms of GDP, the total resources invested in the system have been reduced in past years. Of the 2014 numbers, ARS 10,992 million were spent in the construction of new infrastructure, ARS 3,976 million through the OCCOVI in roadway works, ARS 3,297 million for maintenance, ARS 1,397 million in rehabilitation and maintenance, and ARS 701 million for general and administration expenses. 91
Taking 2014 values into consideration, about 54% of the expenditures were executed for construction, 20% for OCCOVI works, 16% for maintenance, 7% for rehabilitation and maintenance, and only 3% for business expenses. DNV Expenditures (in ARS million) Category 2010 2011 2012 2013 2014 General &Administration Expenses 281 403 548 508 701 Maintenance 1,252 1,589 1,878 2,322 3,297 Constructions 7,174 9,395 8,731 9,845 10,992 Rehabilitation & Maintenance 1,121 1,193 1,059 1,125 1,397 OCCOVI Works 690 1,087 2,028 3,212 3,976 Totals 10,519 13,667 14,244 17,013 20,364 Total / GDP 0.58% 0.59% 0.52% 0.50% 0.46% Table 5-6. Total roadway system expenditures. Based on (CGN Data, 2003-2014). Figure 5-11. DNV Expenses (2010-2014). Based on (CGN Data, 2003-2014). 92
5.2.4 INVESTMENT IN ROADWAY INFRASTRUCTURE The total roadway system expenditures (infrastructure, and subsidies) were approximately ARS 14,130 million in 2010, and increased to ARS 25,167 million in 2014. Of those amounts, ARS 20,364 million came from TN through DNV, ARS 2,827 million from the fuel tax assigned to DPV, and ARS 1,976 million from the gasoil tax and road fee allocated in SISVIAL. Considering the 2014 numbers, about 81% of the expenditures were executed by DNV and contributed by TN, 11% fulfilled by DPV and funded with the fuel tax, and only 8% from SISVIAL through the gasoil tax and road fee. It is important to point out that the resources invested in the roadway system at a provincial level are estimated to be more. As this thesis only analyzed the federal revenue streams, it was not possible to quantify the incidence of provincial taxes and fees in the system. Regardless, it is feasible to see that the expenditures in the sector have been reducing in terms of GDP participation: while in 2010 the expenditures represented 0.78% of the GDP, in 2014 it was only 0.57%. Roadway System Expenditures (in ARS million) Category 2010 2011 2012 2013 2014 SISVIAL (Gasoil Tax & Road Fee) 2,737 3,315 2,202 1,662 1,976 DNV (National Treasury) 10,519 13,667 14,244 17,013 20,364 DPV (Fuel Tax) 874 1,108 1,560 2,058 2,827 Totals 14,130 18,090 18,007 20,732 25,167 Total / GDP 0.78% 0.78% 0.65% 0.61% 0.57% Table 5-7. Total roadway system expenditures. Based on (DNIAF Data, 2003-2014), (CGN Data, 2003-2014) and (UCOFIN Expenses, 2016). 93
Figure 5-12. Roadway system expenditures. Based on (DNIAF Data, 2003-2014), (CGN Data, 2003-2014) and (UCOFIN Expenses, 2016). 5.2.5 HISTORICAL BACKGROUND (2001-2014) Decree 1299/2000. The Infrastructure Development Trust Fund [FDI - Fondo Fiduciario de Desarrollo de Infraestructura] was created to foster private involvement in project funding through a Liquidity Reserve [RL - Reserva de Liquidez]. This reserve is funded by assets and resources provided by the federal and provincial government, incomes from project operation or asset sale, and contributions, subsidies, heritages or donations. These resources must be invested for a period of less than one year in sovereign debt or term deposits. 94
Decree 802/2001. The Liquid Fuels and Natural Gas Tax (Law 23966, Chapter 1, Title 3) was modified establishing a tax of ARS 0.15 per liter over gasoil, dieseloil and kerosene (Article 1). In addition, for the rest of the items the tax is decreased to ARS 0.38 per liter (Article 2). These values would be later increased to the values described in the previous chapter. Fuel Percentage ARS/liter Leaded Gasoline < 92 RON 70% 0.38 Leaded Gasoline > 92 RON 62% 0.38 Unleaded Gasoline < 92 RON 70% 0.38 Unleaded Gasoline > 92 RON 62% 0.38 Virgin Gasoline 62% 0.38 Natural Gasoline 62% 0.38 Solvent 62% 0.38 Turpentine 62% 0.38 Gasoil 19% 0.15 Diesel-oil 19% 0.15 Kerosene 19% 0.15 Fuel Percentage ARS/m 3 CNG 16% - Table 5-8. Liquid Fuels and Natural Gas Tax modification. Source (InfoLEG Decree 802, 2001) A Gasoil Tax (Article 4), with a value of ARS 0.05 per liter, was created in order to develop infrastructure projects and eliminate/reduce tolls, as well as a Road Fee, at a value of ARS 0.75 per 100km (Article 7, 8 and 9). This fee would be paid by roadway corridor users and charged by the concessionaire. The fee would be strictly linked to the GDP per capita. It is important to point out that the Gasoil Tax would be later replaced by the Gasoil and LNG for automotive use Tax. 95
Tax / Fee Value Units Gasoil 0.05 ARS/liter Road 0.75 ARS/100km Table 5-9. Gasoil Tax and Road Fee. Based on (InfoLEG Decree 802, 2001) In addition, per Article 10, tolls are reduced 30% for Class 1 and 2, and 60% for Class 3 to 6. Class Vehicle Type 1 Vehicle up to 2-axle and 2.10m elevation, without dual tires 2 Vehicle up to 2-axle and more than 2.10m elevation, and/or dual tires 3 Vehicles with more than 2-axle and up to 4-axle, and 2.10m elevation, without dual tires 4 Vehicles with more than 2-axle and up to 4-axle with dual tires 5 Vehicles with more than 4-axle and up to 6-axle with dual tires 6 Vehicles with more than 6-axle Table 5-10. Vehicle Classification. Fare Structure Class 1 Class 2 Class 3 Class 4 Class 5 Class 6 Original Fare (Basic Fare multiplier) 1 2 2 3 4 5 Relationship (Class i / Class 1) 1 2 2 3 4 5 Reduction 30% 30% 60% 60% 60% 60% New Fare 0.7 1.4 0.8 1.2 1.6 2 New Relationship (Class i / Class 1) 1 2 1.1 1.7 2.3 2.9 Table 5-11. Toll Fare reductions. Based on (InfoLEG Decree 802, 2001) Decree 976/2001. It derogates Article 4 of Decree 802/2001 as it sets the conditions for implementation of the Gasoil Tax (Title 1). Moreover, a trust fund was created in order to manage the Gasoil Tax and Road Fee resources, among others. Only 20% of the resources from Gasoil Tax would be available to develop the passenger or cargo railway infrastructure. 96
Decree 1377/2001. The SIT was created as well as the SISVIAL, the SIFER and the national and provincial networks that would be part of these two systems. It is established that 100% of the Gasoil Tax must be invested in SIT: 80% for the Roadway Network (70% according to the assignation scheme established for each province; the remaining 30% will be distributed according to what is determined to be necessary to develop, and maintain the network) and 20% for the Railway Infrastructure of SIFER (25% will be invested in AMBA s railway network while the remaining 75% will be invested in the rest of the network). The entire Road Fee must be invested in the roadway and corridors where those resources were collected, excluding the expenses needed to collect them (Article 9). In order to have backup resources at any time, a RL was created for 5 years with 3% of the Gasoil Tax and Road Fee sum collected annually. In case it is used up, the RL must be reconstituted. Every 5 years the provinces can modify the Roadway and Railway network considered in SIT. 97
Figure 5-13. SIT Structure (2001-2002). Based on (InfoLEG Decree 1377, 2001) SIT - Resources Allocation Concept Percentage Gasoil Tax 100% Liquidity Reserve 3.00% SISVIAL - Provinces 54.32% SISVIAL - Free Availability 23.28% SIFER - AMBA 4.85% SIFER - Rest 14.55% Road Fee 100% Liquidity Reserve 3.00% SISVIAL - Provinces 67.90% SISVIAL - Free Availability 29.10% Table 5-12. SIT Allocation of resources. Based on (InfoLEG Decree 1377, 2001) Decree 1381/2001. The Hydraulic Infrastructure Fee [Tasa de Infraestructura Hídrica] was created as well as the Hydraulic Infrastructure Trust Fund [FIH - 98
Fidecomiso de Infraestructura Hídrica]. The resources of the FIH must be used to develop hydraulic projects, works, maintenance and services, to recover productive areas, control and mitigate flooded areas and protect the roadway and railway infrastructure. In order to have backup resources at any time, a RL was created for 5 years with 3% of the Hydraulic Infrastructure Fee sum collected annually. If emptied, the RL must be reconstituted. Resolution 531/2001. The UCOFIN was created under the Ministry of Infrastructure and Housing s jurisdiction [MIV - Ministerio de Infraestructura y Vivienda], which in 2003 would be renamed as MPFIPS, in order to manage SIT, FIH and the FDI resources. Figure 5-14. UCOFIN organizational structure (2001-2003). Based on (InfoLEG Resolution 531, 2001) 99
Decree 652/2002. The SIT was rearranged. The Integrated Ground Transportation System [SITRANS Sistema Integrado de Transporte Terrestre] was created, and includes the already existing SIFER and the newly created Automotive Transportation System [SISTAU - Sistema Integrado De Transporte Automotor]. The SISTAU aims to include passenger automotive transportation in the trust fund, in order to compensate fare discrepancies produced in the costs of transportation companies in urban and suburban areas because of the currency depreciation. Figure 5-15. SIT Structure (2002-2003). Based on (InfoLEG Decree 1377, 2001) and (InfoLEG Decree 652, 2002). As a result, the Gasoil Tax was modified to 18.5% of the price before taxes per liter. Considering that a new unit was created within SIT, the resource allocation was redistributed in the following manner: 60% for SISVIAL and 40% for 100
SITRANS excluding the resources required for RL. The resources allocated in SISTAU cannot exceed 65% of SITRANS funds. SIT - Resources Allocation Concept Percentage Gasoil Tax 100% Liquidity Reserve 3.00% SISVIAL - Provinces 40.74% SISVIAL - Free Availability 17.46% SIFER (minimum) 13.58% SISTAU (maximum) 25.22% Road Fee 100% Liquidity Reserve 3.00% SISVIAL - Provinces 67.90% SISVIAL - Free Availability 29.10% Table 5-13. SIT Allocation of resources. Based on (InfoLEG Decree 1377, 2001) and (InfoLEG Decree 652, 2002). Decree 1006/2003. The new concessioner companies as well as the OCCOVI were added as beneficiaries of the SIT. Resolution 543/2003. Five percent (5%) of SISTAU resources would be used to finance the new SISTAU Cargo account [SISTAU Cargas], created to improve the automotive transportation cargo system (2%), and REFOP account [Cuenta REFOP Régimen de Fomento de Profesionalización del Transporte de Cargas], designed to provide benefits to transportation cargo personnel. ARS 45 million of RL were assigned to the REFOP account. 101
Figure 5-16. SIT Structure (2003). Based on (InfoLEG Resolution 543, 2003). SIT - Resources Allocation Concept Percentage Gasoil Tax 100% Liquidity Reserve 3.00% SISVIAL - Provinces 40.74% SISVIAL - Free Availability 17.46% SIFER 13.58% SISTAU Passengers 23.28% SISTAU Cargo 0.78% SISTAU Emergency / REFOP 1.16% Road Fee 100% Liquidity Reserve 3.00% SISVIAL - Provinces 67.90% SISVIAL - Free Availability 29.10% Table 5-14. SIT Allocation of resources. Based on (InfoLEG Resolution 543, 2003) 102
Decree 1142/2003. The UCOFIN is moved under the MPFIPS influence. Figure 5-17. MPFIPS simplified organizational structure- Coordination Units (2003-2004). Based on (InfoLEG Decree 1142, 2003). Decree 301/2004. The resources of the Gasoil Tax were now distributed equally between SISVIAL (50%) and SITRANS (50%). In addition, within SITRANS, the Transportation Compensation System [SISCOTA Sistema de Compensaciones al Transporte] was created in order to reduce the tolls for passengers and cargo in the National Highway System. A 30% toll reduction is applied for any natural or legal person that provides automotive cargo transportation services, for class 3, 4 and 5 vehicles. In Corridors 18 and 29, this reduction will be additional to the one applied for class 4, 5 and 6 vehicles according to Decree 802/01. A 100% toll reduction of the National Roadway Corridors is given to licensed people that provide automotive passenger transportation services, for class 3 vehicles. The information to execute these reductions is provided by the Automotive Transportation Unique Registry [R.U.T.A. Registro Único del Transporte 103
Automotor] for the automotive cargo transportation services, and by the CNRT for the automotive passenger transportation services. Decree 508/2004. Allows the DNV to use SISVIAL funds to develop highway infrastructure as well as letting the Undersecretariat of Hydraulic Resources [SubSRH Subsecretaría de Recursos Hídricos] use FIH funds to develop projects. Decree 1359/2004. The UCOFIN is moved under the Ministry of Economy and Production influence, which would then be renamed as MEFP. Decree 1488/2004. In order to reconstitute the liquidity reserve, it would set aside 10% of the Gasoil Tax revenue during 180 days (6 months). It is authorized to use up to 7% of those resources to increase compensations/subsidies of the transportation passenger services paid by SISTAU. SISCOTA will have priority over the SITRANS accounts. In addition REFOP was extended (1/1/2004 to 30/06/2004) and in order to cover the expenses, Fiscal Credit Certificates [Certificados de Crédito Fiscal] for the sum of ARS 32,878,000 must be credited in the SISTAU Cargo account. Law 26028 (2005) established a 20.20% tax over gasoil purchases and imports with a specific dedication to SIT, until 2010 (inclusive). Decree 564/2005. Establishes the distribution criteria of SIT resources, which will be applied temporarily from May 7, 2005 until December 31, 2005. From resources obtained through Law 26028, 7.4% must be used for REFOP and 1% for SISTAU as fare compensations. The RL resources must be assigned (up to 7% can be used for fare compensation) from the remaining amount. At that point, 50% of the resources must be assigned for SITRANS (65% for SISTAU and 35% for SIFER). 5% of SISTAU must be assigned to the cargo account. 15% of 104
SISVIAL must be assigned to SISTAU for fare compensation. Finally, the SIFER resources can be used to compensate the fare increases in AMBA. Decree 1069/2005. Specific projects are added to the list of ventures that can be financed by UCOFIN for DNV and OCCOVI. Law 26074 (2005). The gasoil and diesel oil imports are excluded from the taxes levied per Law 23966 and Law 26028 considering the shortage of these products in the internal market. Decree 118/2006. Extends the distribution criteria for SIT established by Decree 564/05 until April 30th 2006. Decree 678/2006. It temporarily incorporates a new account, named Supplementary Compensation Regime [RCC Régimen de Compensaciones Complementarias], in order to reimburse the increments in urban and suburban automotive passenger public transportation company costs in AMBA. The RCC will have resources transferred from TN. ST is allowed to use 100% of the RL established by Decree 1377/2001 (3% of Road Fee and Gasoil Tax). The ST is allowed to pursue credit lines for fleet renewal. The Liquidity Reserve constituted by Decree 1488/2004 and SIT resource distribution established by decree 564/2005, are extended for all of 2006. However, two new accounts are added to SIT: REFOP and SISCOTA, which has priority over SISVIAL and SISTRAN. The resource distribution is performed as follows: excluding RL and SISCOTA, 50% of the resources must be assigned to SISVIAL and 50% to SITRANS, composed of SIFER and SISTAU, who cannot receive more than the 60% of the resources. The RCC is part of SISTAU (SISTAU passengers). Decree 98/2007. RCC is extended in time and ST is allowed to use up to 7% of the RL established over the Gasoil Tax (Decree 1488/2004). 105
Decree 455/2007. A 100% toll reduction is applied for any natural or legal person that provides automotive cargo transportation services and uses the National Roadway Corridors under concession for vehicle classes 3, 4, and 5. For the National Corridors 18 and 29, these reductions will be applied to class 4, 5 and 6. For those who are not included in these groups (Law 24653), the reduction would be 30% according to Decree 425/2003 and Decree 1875/2006. As for National Corridors 18 and 29, this reduction will be additional to the 30% discount established by Decree 802/2001 and will be applicable for vehicles categories 4, 5 and 6. These compensations will be covered by SISCOTA funds. Law 26325 (2007) modifies Law 26028. The tax was raised 21%, and is applied as follows: 20.20% for SIT and 0.80% to compensate automotive passenger public transportation system fares in urban and suburban areas under provincial and municipal jurisdiction, with the exception of CABA and AMBA. Law 26337 (2007). Diesel oil and gasoil imports are exempt of tax levied over these products during 2008 to satisfy the internal demand shortage. Decree 449/2008. Establishes that 3.8% of SIT must be assigned to RCC in order to reinforce the fare compensations funds. From the remaining resources 7.4% must be allocated to REFOP and 1% to SISTAU. Law 26422 (2008). Gasoil Tax is extended until December 31, 2024 (Article 37). Law 26454 (2008) modifies Law 26325. The tax is raised to 22%, as allocated resources increased from 0.80% to 1.80% to compensate automotive passenger public transportation system fares in urban and suburban areas under provincial and municipal jurisdiction, with the exception of CABA and AMBA. Decree 2091/2008. Approved the inclusion of different highway projects as beneficiaries of SIT. 106
Resolution 26/2009. MEFP gives the Argentinean National Bank [BNA Banco de la Nación Argentina] instructions to issue bonds and certificates to fund SIT with ARS 4 billion under the [Programa Global de Emisión de Valores Representativos de Deuda] Decree 54/2009. New SIT beneficiaries are added to use SISVIAL funds: the Undersecretariat of Urban Development and Housing [SubSDUyV Subsecretaría de Desarrollo Urbano y Vivienda], under MPFIPS, DNV and OCCOVI jurisdiction. The funds would be allocated for urban roadway works, farm-tomarket roads, town accesses and road safety implementations. Resolution 235/2010. The BNA is approved to issue bonds in order to raise ARS 2.1 billion using SIFER assets as a guarantee. Resolution 875/2010. In order to comply with the Roadway Plan [Plan Vial] created by MPFIPS, BNA is authorized to issue bonds and certificates to raise ARS 2.5 billion. Resolution 173/2011. BNA is approved to issue bonds in order to raise ARS 2.1 billion using SIFER assets as a guarantee. Decree 494/2012. The REFOP program is cancelled. The resources allocated to this account now are available for SIFER. 107
5.3 Conclusions Argentina has changed the sources to finance its roadway infrastructure along the years. In most cases, the increase in expenditures plus the different economic crises were responsible for these adjustments. It started with specific resources directly linked to transportation activities and it ended with a trust fund that combines different funding sources: gasoil tax, road fee, resources from the federal budget, and BNA bonds. In any case, resources are not sustainable if the federal government keeps subsidizing tolls, and public transportation in AMBA. Moreover, due to subsidy increases, SIT presents a complex structure which makes it difficult to audit how the money is spent and validate its efficiency. There should be a limited number of accounts within the SIT and resource allocation should be clear and not frequently modified to cover temporarily programs or particular situations. In addition, it is possible to observe that the expenditures in the roadway system have been decreasing in the past years in terms of the GDP. Not only SISVIAL expenditures have decreased but also the resources allocated in DNV from the federal budget. In conclusion, the assigned resources are not enough to maintain and develop the roadway system as it should for Argentina to grow. 108
6. HOW TO IMPROVE ARGENTINA S ROADWAY FUNDING 6.1 Introduction Argentina needs to improve and renovate its roadway infrastructure in order to satisfy the growing demand. It is important to guarantee the safety and quality of transportation services. In order to understand how much money should be invested, it is common to compare the roadway infrastructure in the country being study with other countries that are developing and present better indexes. According to (CAF, 2011), Argentina needs to invest in its roadway infrastructure 3% of the GDP annually, for the next 20 years. In 2014, SISVIAL resources (around ARS 1,976 million) represented 0.04% of the GDP. The federal resources transferred to the DNV invested in the improvement, maintenance, and rehabilitation of the national roadway infrastructure (around ARS 20,364 million) represented 0.46% of the GDP. In addition, the DPV resources from the fuel tax (around ARS 2,827 million) represented only 0.06% of the GDP. Thus, during 2014 the investment in roadway infrastructure could be estimated as 0.57% of the GDP (around ARS 25,167 million, or approximately $3,100 million). This means that the roadway infrastructure investment is still far from the values proposed by CAF. A more realistic approach would be to consider the roadway investment plans developed by the Argentine Construction Chamber [CAC Cámara Argentina de la Construcción] for two different periods: 2010-2020 or 2016-2025. According to (Sanguinetti, 2012), an investment of 1.21% of the GDP is required during 10 years to 109
comply with the 2010-2020 plan. According to (Bortolín, 2015) it would require a 0.95% investment of the GDP during 10 years to comply with the proposed plan for 2016-2025. Moreover, according to (Barbero, Castro, Abad, & Szenkman, 2011) the average investment in the region is about 1.3% of the country s GDP. Considering that the roadway investment in Argentina in terms of GDP has been reducing in the past years, it could be said that an attempt should be made to comply with an investment of 1.5% of the GDP, which represents half of the proposed values by CAF. 6.2 Recommendations In Argentina, as well as other countries of the region, recent studies have pointed out the presence of two key factors that restrict funding sources availability to develop transportation infrastructure. First of all, there are inconsistencies in the design and fulfillment of regulatory policies, which partly explains the private sector s low participation in past years investment. Secondly, the domestic financial system is not yet developed, and is characterized by insufficient long term savings mechanism and limitations to capital market development as tools to finance the infrastructure (CAF, 2011). The freeze in user s fares enforced by the federal government reduced the private sector s interest in developing transportation infrastructure. International financial institutions have also reduced their investments in the past years because the government was not able to provide verifiable economic indexes. Without these actors it would be very difficult to reach the required level of investment to develop and maintain the roadway infrastructure 110
If an increment in investments is projected, some recommendations are described below (Barbero, Castro, Abad, & Szenkman, 2011) (Sanguinetti, 2012): Adjust transportation prices and fares so users contribute to financing the services. It is the most democratic way, meaning those who use the infrastructure should contribute to financing services. Readjust subsidy plans in order to provide them directly to the demand, instead of subsidizing the inefficient and unproductive supply creating lost resources that could be better used to invest in transportation infrastructure. Expand public funds for investment in infrastructure through general revenue resources, specific taxes and multilateral funding. Improve regulatory frameworks and promote transparency and respect for the legal system. Develop efficient safeguards to reduce financial and regulatory risks associated with infrastructure provisions and long-term contracts so as to attract venture capital and generate the funding required by the transportation industry. Promote domestic financial market development with the tools required to boost medium and long term savings mechanisms, to finance productive infrastructure investments. 6.2.1 FARE UPDATES According to (Sanguinetti, 2012) if the toll fares real values are updated to the ones previous to the 2001 economic crisis (approximately $2 average per vehicle), incremental resources of ARS 3,500 million could be available, which represent around 0.08% of 111
2014 s GDP. If after these updates there is also a restoration for cargo transportation tolls, the resources available could be even more than those described before. Roadways concessions should be at least the way governments transfer the risk of operation and maintenance to the private sector. 6.2.2 SUBSIDY REDUCTIONS In 2011, the subsidies provided to automotive passenger transportation services in AMBA from SISTAU were approximately ARS 12,344 million (0.53% of the GDP). In 2012, these subsidies totaled ARS 17,051 million (0.62% of the GDP), while in 2013 it represented ARS 17,764 million (0.52% of the GDP) and in 2014 around ARS 24,418 million (0.55% of the GDP). In conclusion, assuming a 50% reassignment of SISTAU passenger subsidies would make approximately ARS 12,210 million available for resources, which represents almost 0.28% of the 2014 GDP. This assumption seems realistic considering that the new president is currently reducing transportation, energy, and water subsidies in similar proportions along with an exponential increase in consumer fares, as was extensively recommended throughout this thesis. However, subsidy reductions should be performed gradually; it is important to communicate the measures and explain them correctly. The public should be aware of the negatives aspects of subsidizing the supply and the burden that these extremely expensive subsidies produce to the overall community. It is important that the government finds a way to subsidize the demand instead of the supply, prioritizing those social groups who need it the most. The SUBE, being an electronic payment method for transportation services that saves the user information could link this data to his/her social security, 112
making this goal achievable; unfortunately this technology is not yet prepared to perform this way yet according to the MIT. 6.2.3 SPECIFIC TAXES A traditional source of funding for the transportation industry has been fuel taxes (gasoline, gasoil, diesel or LPG), which means users pay for the roadway indirectly when they disburse this tax. The liquid fuel tax rose about ARS 28,377 million in 2014; yet only ARS 2,827 million have been directly spent in roadway infrastructure through the DPVs. Despite the fact that this tax doesn t provide infrastructure funding at a national level, the resources collected by the federal government (approximately ARS 4,712 million in 2014) are not enough to compensate for the transferal from the federal budget to the DNV (ARS 20,364 million in 2014). Thus, considering that the oil price decrease has not been reflected in the local market (in fact, the gasoline prices have increased more than the inflation), it is not possible to think about an increase in liquid fuel tax nor gasoline tax which is fully distributed in SIT. It is important to understand that fiscal pressure in Argentina has reached very high levels (about 35% of the GDP) and there is almost no room to increase taxes or create new ones. 113
6.3 Conclusions Under the current conditions, it is difficult to increase Argentina s roadway network investment from 0.57% to 3% of the GDP. Nonetheless, just by updating to real toll values as well as reducing subsidies in AMBA, it would be possible to increase investments to approximately 45% (about 0.83% of the GDP). This could be the start to undo the interventionism path that the federal government started in the past to gain political strength by providing minimum tolls and public transportation fares to users. Considering that the economic conditions, even with the change of administration, are not yet the best for private sectors to be involved, almost duplicating the investment of the roadway system is a good way to pave the road for the future. 114
7. CONCLUSIONS Argentina has never been consistent with the organizations responsible for financing, promoting, regulating and delivering transportation programs and services. In the same way, it has never been persistent in providing sustainable financing sources. The cyclic economic crises did not allow a continuous funding policy for the ground based transportation system. If the intention is to give transportation a key role, a ministry that includes all modes (ground, air, and water) should be created 6 and maintained through all future administrations, without every newly elected president modifying these organizations responsible for transportation policies. Along the years, Argentina has changed the sources used to finance roadway infrastructure. In most cases the increase in expenditures as well as the numerous economic crises, were responsible for these changes. It began with specific resources directly linked to the transportation activities and it ended with a trust fund that combines different sources: gasoil tax, road fee, resources from the federal budget, and BNA bonds. In any case, the resources are not sustainable if the federal government keeps subsidizing tolls, and public transportation in AMBA. Additionally, due to the increase in subsidies, SIT presents a complex structure which makes it difficult to audit how the money is spent and validate its efficiency. The assigned resources are not enough to maintain and develop the public transportation system as is required for the country to grow. At the moment, the only tax 6 The newly elected president Mauricio Macri created a Ministry of Transportation with the characteristics described in this thesis. However, it would be important for this structure to remain unaffected throughout the following administrations to come. 115
that is entirely dedicated to the national roadway network development is the 22% tax over gasoil expenditure, which represents less than 0.7% of the GDP. The resources that should be financing the transportation infrastructure, operation, and maintenance are currently used for other purposes. In fact, only 22.91% of the tax levied over gasoline expenditures is available in the federal budget, and only 13.746% of the gasoline tax is used to finance the different DPVs. Under the current conditions, it is difficult to come out with a plan to increase Argentina s investment in its roadway network from 0.57% to a 3% of the GDP. However, just by updating the real toll values as well as reducing automotive public transportation subsidies in AMBA, it would be possible to increase roadway investment by approximately 65% (about 0.83% of the GDP). This could be the start to undo the interventionism path that the federal government started in the past to gain political strength by providing minimum tolls and public transportation fares to users. Considering that the economic conditions, even with the change of administration, are not yet the best for private sectors to be involved, almost duplicating the investment of the roadway system is a good way to pave the road for the future. 116
APPENDIX A 7 After the 2001 financial crisis, during Nestor Carlos Kirchner s presidency (2003-2007), Argentina experienced twin fiscal and current account surpluses. For almost a decade, this unique situation allowed the federal government to fuel expenditures and stabilize its external position without recurring to international credit markets. The federal administration was able to maintain a steady flow of dollars needed to honor the country s refinanced external debt, and fund infrastructure investments. By 2011, both surpluses had almost completely disappeared. Furthermore, since 2007, the National Institute of Statistics and Censuses [INDEC Instituto Nacional de Estadística y Censos] started to produce unreliable inflation and GDP statistics, which caused a debate on Argentina s official statistics and made impossible for the country to access international credit markets. The government reacted by issuing intra-government loans from both the ANSES and the Central Bank [BCRA Banco Central de la República Argentina], as well as the monetization of the fiscal deficit. In addition, politically sensitive regulations and restrictive measures were introduced, including rigid import controls, bans on the purchase of dollars by individuals (a parallel currency market was created in which the dollar was traded 50% above its official value), and restrictions on dividends repatriation. In other words, the administration s decided to sacrifice economic growth to ensure a steady stream of dollars. While this new strategy proved successful for short-term dollar needs, it was more costly than anticipated in terms of general economic activity, as well as consumer and 7 Summary and self-elaboration of the information provided in (Cefeidas Group, 2015) about Argentina s economic difficulties. 117
investor confidence: Argentina s GDP has grown very little since 2011 and the economy is currently in recession; and inflation remains in the 30% range. Year Exchange Rate Annual Inflation Rate ($) (Usd) INDEC Private BCRA GDP (in million ARS) 2003 3.66% - 2.949 447,307.00 2004 6.10% - 2.942 535,828.34 2005 12.33% - 2.923 647,256.73 2006 10.64% - 3.074 808,592.61 2007-25.88% 3.116 1,027,338.91 2008-21.40% 3.161 1,283,905.61 2009-13.97% 3.730 1,411,525.96 2010-25.15% 3.913 1,810,830.02 2011-21.74% 4.130 2,312,008.58 2012-27.07% 4.551 2,765,575.38 2013-27.18% 5.479 3,406,265.10 2014-36.18% 8.119 4,425,694.30 Table A-1. Economic indicators. Based on (BCRA, 2016) and (INDEC GDP, 2016). In order to attract international investors, the government has resolved a number of disputes and struck deals with international lenders in order to normalize relations with overseas capital markets. In 2013, the government announced it would pay bonds amounting to $500 million to five American and European companies that had successfully taken Argentina before the World Bank s investment tribunal, the International Centre for Settlement of Investment Disputes (ICSID). In 2014, the Paris Club and the Argentine Government reached a settlement which allows the country to clear the $13.8 billion debt owed to the group since 2002 over the next five to seven years. Recently elected President Mauricio Macri, with a more pro-business approach, has quickly started in 2016 to improve the financial conditions by eliminating cross-border transfers restriction, revising export duties, unifying exchange rates, reducing subsidies, 118
and coming back into international markets issuing bonds worth $10 billion to $15 billion, settling the 15 year default with creditors. The new administration has so far demonstrated a willingness to address Argentina s fiscal imbalances. However, despite a confident start, considerable challenges remain. The country s transportation and utilities fares have largely remained frozen since 2002, to help contain rising inflation rates and for fear of public backlash if prices were raised. Due to consistently low consumer prices, the domestic demand has steadily increased. Meanwhile, subsidies provided to transportation and energy sectors to protect local companies from rising costs has deepened the country s deficit. Frozen tariffs have led to largely stagnant revenues and continue to discourage companies from investing. Public services have therefore deteriorated meaning that consumers are even less likely to accept an increase in tariffs. 119
APPENDIX B According to Decree 8/2016, the Ministry of Transportation [MT Ministerio de Transporte] is created and its organizational structure is defined. Three new secretaries and one undersecretariat were created under its direct command. Undersecretariat of Administrative Coordination [SubSCA - Subsecretaria De Coordinación Administrativa]. Secretariat of Transportation Planning [SPT - Secretaria De Planificación De Transporte], which is formed by four new undersecretaries: (1) Undersecretariat of Urban Mobility [SubSMU - Subsecretaría De Movilidad Urbana]; (2) Undersecretariat of Transportation Planning and Coordination [SubSPyCT - Subsecretaria De Planificación Y Coordinación De Transporte]; (3) Undersecretariat of Cargo and Logistics Transportation Planning [SubSPTCyL - Subsecretaría De Planificación De Transporte De Cargas Y Logística]; (4) Undersecretariat of Interurban and International Passenger Transportation Planning [SubSPTIeIP - Subsecretaría De Planificación De Transporte Interurbano E Internacional De Pasajeros]. Secretariat of Transportation Management [SGT - Secretaria De Gestión De Transporte], which is formed by the already existing SubSGAT, SubSTF, SubSTAut, SubSPyVN. Secretariat of Transportation Works [SOT - Secretaría De Obras De Transporte], which is formed by the Undersecretariat of Works Procurement and Execution [SubSCyEO - Subsecretaría De Contratación Y Ejecución De Obras] and the 120
Undersecretariat of Works Supervision and Control [SubSSyCO - Subsecretaría De Supervisión Y Control De Obras]. Figure B-1. MT simplified organizational structure. Source (InfoLEG Decree 8, 2016). Figure B-2. SPT simplified organizational structure. Source (InfoLEG Decree 8, 2016). 121
Figure B-3. SGT simplified organizational structure. Source (InfoLEG Decree 8, 2016). Figure B-4. SOT simplified organizational structure. Source (InfoLEG Decree 8, 2016). In addition, many decentralized agencies, that were related to key transportation issues and where part of other ministries, were moved under its influence. Previously part of the MIT: ANSV, CNRT, ADIF, SOF, FA, BCyL, ARHF, ANAC, ORSNA, JIACC, EANA, ARHF, and IAT. Previously part of the MPFIPS: DNV. 122