July 25, 2014
New season for an endless debate
If the income tax floor was an improbable working-class obsession for much of last year (especially for the higher-paid from the heavyweight trade unions and for skilled workers), the past week has seen a lively interest shown in political circles. In a week when the agenda was dominated by the kind of crime-related hysteria which might seem tailormade for its style of politics, Sergio Massa’s Renewal Front devoted considerable time and effort to presenting a bill offering an alternative system (basically updating the income tax floor twice a year on an index-linked basis in much the same way as pensions since early 2009 — a time when Massa was President Cristina Fernández de Kirchner’s Cabinet chief having previously headed ANSeS social security administration). And during the marathon eight-hour appearance of the Cabinet chief (formerly Chaco Governor Jorge Capitanich, not Massa) in the Lower House on Thursday, crime obviously dominated with Capitanich having to field various related accusations but otherwise he probably gave questions on the income tax floor more serious attention than any other issue. Capitanich basically told the House that he had a “clear message from the president” that the government was open to hearing suggestions and to “working together” but that the fiscal impact of any proposal would have to be taken into account, thus implying that alternative sources of revenue would need to be offered.
The income tax floor has taken its time regaining prominence but it looms as an awkward factor in collective wage bargaining already complicated by devaluation and the phased withdrawal of utility rate subsidies. At a time when the government was still entertaining hopes of holding wage increases well below 25 percent, the potential tax trap was not such a major factor but now that the benchmark is looking much more like 30 percent, the net pay of the higher-paid workers stands to be two-thirds or less of gross. For now this issue has largely been aired in Congress but we should be hearing much more of it as this autumn’s collective bargaining progresses.
The forecasts of a long hot summer of labour discontent were not entirely fulfilled but this coming Thursday’s general strike will be a measure as to whether we can expect a new level of confrontation between the government and organized labour or not.