The Argentine Senate approved raising the tax income threshold Thursday night by a tally of 37 votes in favor and 29 against. This raise had already been approved last week in the Lower Chamber following a broad agreement between UxP and almost all parties.  

This resolution means that the fourth bracket of those who used to pay income tax, meaning people who earn the equivalent of 15 monthly minimum wages (currently AR$1,770,000, US$2,548.2 at the MEP rate, or US$5,093.5 at the official rate), are exempt from the tax. The now approved bill also includes a new provision that progressively affects people with incomes higher than that number. These changes will become effective in 2024.

The Argentine government had raised the income tax threshold by decree two weeks ago, a decision Economy Minister and Unión por la Patria (UxP) presidential candidate Sergio Massa had announced days before. The approval of both chambers of Congress has now turned the new threshold into law.

While all 31 UxP senators voted in favor of the raise, the vast majority of opposing coalition Juntos por el Cambio (JxC) voted against it. JxC Senator Gabriela Gonzáles Riollo from San Luis called the measure “electoraleering and opportunistic,” given that it raises Argentina’s fiscal deficit.  

The approval can be seen as a big political win for Massa, who managed to gather the support of the entire coalition. He celebrated the news shortly after the approval in a message posted on the website X (formerly Twitter), saying that “no worker will ever pay income tax again.” 

“For over 10 years now, I have been saying that salaries are not income, but rather the pay they receive for the work they do every day […] My presidency will undoubtedly be marked by salary and income improvement.”

The bill was backed by the three main workers organizations, the General Confederation of Labor (CGT, by its Spanish acronym) and both branches of the Argentine Workers’ Central (CTA) — CTA Autónoma and CTA de los Trabajadores. 

Following the approval, the CGT released a statement saying that the raise was a “historic victory” for working people, calling it a “turning point towards a real and significant improvement in purchasing power.” 

Only 88,000 people will now pay income tax, less than 1% of total workers and pensioners in Argentina. This makes the tax the exclusive burden of CEOs, managers, sub-managers, privileged pensioners, and other high-income earners. 

Rental Law reform

The Senate also approved the Rental Law reform, but introduced changes that will now have to be passed by the Lower House. Among the changes, the UxP Senate bloc requested that the 3-year minimum on rental contracts remain in place and that price increases be “agreed between the parties” every six months. 

Other proposed modifications are that leases on property intended for residency must be advertised in national currency and that yearly price updates be calculated using the Casa Propia formula. This index, which is published by the Habitat and the Territorial Development Ministry, essentially uses whatever figure is lower between the salary variation of the prior year, or average inflation in the same time frame. 

The reform approved by the Chamber of Deputies last month reduced the minimum contract length from 3 years to 2. Regarding raises, it was established they would happen “within a period of between four and 12 months.”

JxC Senator Víctor Zimmerman defended the bill approved by the Lower House, saying they intended to keep it as is. “[These changes] do not solve the central issue, which is economical and due to inflation,” he stated. 

The Ley de alquileres or Rental Law was originally passed in July 2020, establishing 3-year minimums on rental contracts and yearly price updates that were calculated taking into account both the official inflation rate and the average worker’s salary. 

– with information from Télam