A commission in Argentina’s congress on Thursday began debating a new fiscal reform bill that President Javier Milei filed Wednesday afternoon. The proposed law would reduce the income tax threshold, establish a tax amnesty, create a scheme to regularize undeclared assets, and cut personal asset tax, among other changes. 

The bill incorporates parts of the fiscal chapter of the president’s massive omnibus bill reform package. That chapter was withdrawn in January, before the bill was debated.

The new bill, called the Paliative and Relevant Fiscal Measures Law, was filed on Wednesday. It was being debated by a congressional commission at the time of writing.

The bill is signed by Milei, Security Minister Patricia Bullrich, and Interior Minister Guillermo Francos. In its introduction, they highlight the government’s need to cut spending and increase tax collection, blaming the final months of the previous government for “seriously aggravating” Argentina’s fiscal difficulties.

In the last months of the Alberto Fernández administration, Economy Minister and presidential candidate Sergio Massa introduced tax cuts, including a law hiking the income tax threshold — which Milei voted for — and VAT rebates.

The bill’s authors stated that Argentina applies some of the highest tax pressure in the world to the formal economy, which they argue has led to many companies and individuals failing to pay taxes. They single out the increase on the personal asset tax from 0.25% to 2.25%, which they say often absorbs or surpasses the rent earned from the properties it applies to.

The bill would lower the income tax threshold to earnings of AR$1.2 million per month (US$1,351 at the official rate, US$1,181 at the MEP rate). Under the proposal, any increases would apply only to income above the successive thresholds.

“Under the proposed norms, there will be no cases in which a taxpayer who increases their income will see that increase totally canceled out by the tax,” the authors wrote.

The proposed tax amnesty would give taxpayers 150 days to square their fiscal situations with the authorities. Certain kinds of payment, such as national social security payments, would not be eligible. 

The new bill does not include some of the most politically controversial provisions included in the omnibus bill fiscal chapter, including raising agricultural export duties. Other aspects, such as pension calculations, have already been addressed by presidential decree. 

Martín Tetaz, a deputy for the center-right Unión Cívica Radical party, told the Herald that his bloc broadly agreed with the government on tax reform, labor reform, and the new, pared-down omnibus bill.

However, he said some members of his party opposed the reduction of the income tax threshold and noted that the current threshold increases very rapidly. “There’s concern that in practice, the tax starts really low,” he said. 

He also said the bill needs to put more precise conditions on the origin of funds included in the tax amnesty, to ensure the move does not facilitate the inclusion of laundered money or the proceeds of narcotrafficking.