Thanks to the increasing taxes the middle class is close to extinct, the quality of public education is disastrous to say the least, we’ve got the highest minimum wage in Latin America (around UY $15000, which is around U$S 450 a month), but since the taxes for the National Health Fund (FONASA in spanish), and the tax for retirement, (which by the way, is near to impossible to obtain because the BPS (the organism in charge of that) gives you so much trouble to get it that it would have been better for you to save the money yourself your whole life) you end up with 20% less of your income, that still isn’t enough to cover expenses for food, transport, rent, electricity and water. Don’t even mention if you have an accident and have to pay the medical bills.
And for people who have a bigger income, there is a tax that is just there to screw them called the IRPF. All that money that is taken away from the legal income of all the workers in Uruguay, goes to the state fund and funding for social plans, which are close to dangerous, because they are giving stuff to people in serious conditions of poverty practically for free, instead of making them work for it.
Coming back to the almost extinct middle class, there’s too many people on the verge of becoming poor, and those who do, usually end up in slums. Why, would you ask? Well, because there they don’t have to pay taxes for having a property, they can steal electricity, water, cable. They only have to pay for their food, and the state already helps them with that with their social plans.
And also forget about being an entrepreneur in Uruguay. The taxes here are killing local businesses in benefit of foreign ones. A group of friends of mine wanted to open a videogame development studio, and by year two they had to close because the state increases the taxes yearly, and if you’re having a rough start, you’re screwed. That’s another reason why there are so many businesses working illegally, not paying business’ taxes, just electricity and water.
Uruguay is not poor, but it’s on its way.
By Martin Gramajo