Government axes income tax plan, limits power delegation before bill vote

The about-turns form part of the Milei administration’s negotiations to secure support for the omnibus bill in Congress

Presidential spokesman Manuel Adorni confirmed on Monday that the latest draft of the omnibus bill no longer proposes to delegate legislative powers on fiscal and pension issues to President Javier Milei.

The Milei administration is also pulling a bill it presented just days ago to lower the income tax threshold and has promised to tighten funding for Argentina’s provinces, Adorni said at his Monday morning press conference.

Milei has repeatedly insisted that he will not compromise on his flagship agenda of deregulatory reform. However, the government has announced a series of changes to win allies in Congress in the face of shaky support for the bill. Economy Minister Luis Caputo announced on Friday night that the government would drop the fiscal chapter of the bill in a bid to smooth its passage through Congress.

“Within the fiscal package, legislative delegation on fiscal and pension issues is being withdrawn, which is of course also a part of this economic chapter,” Adorni said. 

Under Argentine law, Congress can give the president the power to pass laws on particular issues with the agreement of the chief of staff, rather than going through Congress. The power lasts for a specified period only, and Congress can revoke the delegation.

Regarding the initiative to lower the threshold at which individuals start paying income tax, Adorni said it was being taken out of the debate, adding: “We feel it is part of the package of modifications in the economic area.”

The threshold for paying income tax was hoisted in September, meaning that less than 1% of Argentina’s top earners were eligible to pay the levy. The government’s bill proposed to calculate an individual’s tax threshold based on a series of social charges, rather than setting a universal cutoff, which would mean workers started paying the tax when they earn around AR$1.35 million-1.55 million (gross) per month.


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