The Argentine Chamber of Deputies approved ruling coalition Unión por la Patria’s (UxP) bill to raise the threshold of the income tax known as Ganancias on Tuesday night. The bill will now be sent to the Senate.

The bill was approved with 135 votes in favor and 103 against after UxP reached a broad agreement with almost all parties in the Lower Chamber, including far-right Javier Milei and Victoria Villarruel from La Libertad Avanza (LLA), left-wing Frente de Izquierda de los Trabajadores (FIT) and several smaller provincial parties.

Opposing coalition Juntos por el Cambio (JxC) provided the vast majority of the negative votes, despite previously asking the tax threshold be modified.

The bill aims to exempt the fourth bracket of those who pay income tax, meaning people who earn the equivalent of 15 monthly minimum wages (currently AR$1,770,000, US$2,602.6 at the MEP rate or US$2,659.6 at the official rate). The bill also adds a new provision that progressively affects people with income higher than that number.

If the Senate approves the bill, only 88,000 people will pay income tax, less than 1% of total workers and pensioners in Argentina. This would make the tax the exclusive burden of CEOs, managers, sub-managers, privileged pensioners, and other high-income earners. Around 890,000 people are currently taxed on their income.

Last week, the Argentine government raised the income tax threshold by decree, a decision Economy Minister and UxP presidential candidate Sergio Massa had announced days before. The bill aims to turn the new threshold into law and ensure its permanence. 

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. All three took part in a march towards Congress before the session started to support the bill.

The bill’s approval can be counted as a political win for Massa, given that UxP managed to gather the necessary votes to back his proposal by negotiating with other parties even though the entirety of JxC — the second biggest bloc in the chamber after UxP — voted against it.

Head of JxC bloc Mario Negri said that the coalition would not vote for the bill on the grounds that they would not “engage in electoral speculation when there is a serious risk of hyperinflation.” He criticized the rest of the parties for backing UxP’s bill.

Presidential hopeful Javier Milei decided to back the bill despite his differences with UxP. Eliminating income tax, along with many other taxes, is one of his main campaign proposals.

Milei, however, said he considers the government’s bill and decree to be a demagogic proposal. “They only expect to make a favorable electoral impact. They’ve had four years to stop stealing from workers, and they only remembered about this in the middle of the campaign,” he told the press on Tuesday, before the session.

— with information from Télam.

Cover photo credit: Nacho Petunchi