Supreme Court rules in favour of City Hall in federal revenue-sharing row

The Supreme Court on Wednesday ruled an injunction in favour of Buenos Aires City’s lawsuit against the national government for knocking off a chunk of its federal revenue-sharing percentage in 2020 and transferring it to Buenos Aires Province.

The justices of the nation’s highest tribunal unanimously ordered the national state to provisionally return City Hall’s percentage of federal revenue-sharing funds of 2.95 percent, which did not totally satisfy its claim of 3.5 percent.

According to the Supreme Court, the decision will not affect the revenues of the other provinces.

“The provinces will not be harmed by this solution because the sum corresponding to Buenos Aires City will only be deducted from the funds corresponding precisely to the national government in the primary distribution,” explained Court spokespersons.

The claim for the difference between the 2.95 percent awarded on Wednesday and the 3.5 percent which City Hall insists is its corresponding share will continue in litigation within the lawsuit, which still does not have a defining sentence.

The Supreme Court ruling should be implemented via “daily and automatic transfers by the Banco de la Nación Argentina.”

The injunction includes “suspending Law 27,606 reducing the federal revenue-sharing allocation” of the City of Buenos Aires.

Background

Strictly speaking, that mechanism originated in a decree signed in 2020 by President Alberto Fernández, who cut City Hall’s percentage of federal revenue-sharing in order to redirect the funds to Buenos Aires Province, and was later ratified in a law.

Back then Buenos Aires Province Governor Axel Kicillof, a member of the ruling Frente de Todos coalition, faced a determined protest by his provincial police seeking wage increases.

The Supreme Court underlined that the financial autonomy of the City of Buenos Aires still lacked substance, “due to the lack of consensus for a federal revenue-sharing law granting the City its corresponding place in federalism as organised by the Constitution.”

In 2016 a decree by former president Mauricio Macri’s government raised City Hall’s federal revenue-sharing allocation from 1.4 percent to 3.75 percent as part of the financing of the transfer of the police to municipal hands.

The Supreme Court ruling observed that “the transfers of jurisdictions, services or functions are processes carried out via agreements between the nation state and the City of Buenos Aires, i.e. from decisions which must be jointly taken by the governments of both jurisdictions.”

When that decree was issued, Macri’s Cambiemos coalition governed at national level, in the Federal Capital and in Buenos Aires Province (today, the former and the latter are in the ruling coalition’s hands).

The current government’s decree and the subsequent law endorsing it rolled back the situation to as it was prior to the changes introduced by the Macri government. The Supreme Court ruling now partially and provisionally restores that decision adopted in early 2016.

The ruling, signed by justices Horacio Rosatti, Carlos Rosenkrantz, Juan Carlos Maqueda and Ricardo Lorenzetti, explained that the underlying question remains in litigation but ordered the transfers to be made "to thus mitigate the risk faced by both sides that, until the final ruling, one of the states ends up receiving less or the other must hand over more federal revenue-sharing funds than correspond under that definition."

Mayor delighted

Buenos Aires City Mayor Horacio Rodríguez Larreta celebrated the Supreme Court ruling favouring City Hall’s claim against the national government for knocking off more than a percentage point of its federal revenue-sharing allocation in 2020 to assign it to Buenos Aires Province.

"This is great news for all Argentines. It’s a victory for the Constitution and federalism against the onslaughts, the abuse of power and the grieta chasm. I have hopes that another Argentina is possible," tweeted Rodríguez Larreta.

The presidential hopeful further announced that he would be evaluating new measures together with his team following the Supreme Court’s unanimous decision on Wednesday morning to return to 2.95 percent of federal revenue-sharing funds.

He later announced that his government would lower taxes in the capital as a result of the ruling, including the immediate elimination of a tax on credit cards and the trimming of a levy on income. The former had been introduced by his administration as a way to compensate for the loss in revenue.

Macri, posting on Twitter, also hailed the news. "I celebrate the Supreme Court ruling which returns to the City what corresponds to it. The arrogance of those who would bulldoze the laws and institutions to smother their opponents is finishing. The end of populism is ever closer,” he declared.

– TIMES/NA