It was a pretty shaky congressional year for Argentine politics, but the last bill to be debated before summer recess seems like it will be the battle of the year. In what was a tough blow for the Government, the opposition — bar a few exceptions throughout the year — managed join forces to take down the administration’s project to reform the income tax and approve its own in the Chamber of Deputies last week.
The fight will now go to the Senate, but with only 12 of the Chamber’s 72 senators being seen as loyal to Macri’s administration, the President seems to be putting his hope in governors pressuring their province’s Senators to take down the bill, or at least modify it. Due to the federal components of the tax, its approval would also translate to a major fiscal cost to the provinces’ administrations, with few provinces being able to pick up an added expense within their budgets.
Leader of the Victory Front-Justicialist caucus (FpV-PJ) in the Senate, Miguel Angel Pichetto, called in his colleagues to a meeting to define a joint stance. With 42 out of the 72 senators in attendance, the meeting will (in practical terms at least) define the project’s fate.
The verbal battle will begin tomorrow during the Senate’s budget special committee which was created to decide whether to send the initiative to the floor. Each side has readied its guns that will defend their respective arguments. Governors Juan Manuel Urtubey (Salta) and Juan Schiaretti (Córdoba) will defend the current administration, while Mario Das Neves (Chubut) and Carlos Verna (La Pampa) will argue in support of the opposition. The leaders of the CGT umbrella union will also make their way to Congress to support the project. The opposition’s main message: “voting against the reform is voting against the working class’s will.”
“60 percent of the representatives (deputies) passed a project that workers will join. We will respect the decision they make, but requesting its approval,” said CGT leader Hector Daer.
Committee Chair, FpV-PJ Senator Juan Manuel Abal Medina, has also invited economists and tax experts to weigh in. But since most renowned voices in the matter also have public political ideologies, it’s unlikely to hear any unbiased input.
The media battle took the spotlight during the past week — practically all high-ranking government and opposition representatives came out to defend their stances and take on an opponent — but it will all come down to Wednesday’s debate at the Senate, where things can go the following way.
If it’s approved
Should this happen, the bill would make its way to President Macri’s desk, who will then have to make one of the most important political decisions of the year: approve it and deal with the massive fiscal repercussions at a time when his administration is trying to do the exact opposite; or veto it and deal with the political cost of a decision that, at least in term of optics, will almost certainly been seen by many as refusing to put much needed money workers’ pockets.
In what may have been a poor political move, Vice President Gabriela Michetti hinted last week that Macri would veto the bill should it come to it. By anticipating that the government would be willing to take it down, senators could approve it even if they are against it, knowing it will be Macri who will take the political and financial hit.
If it’s approved but gets modified
This is a plausible scenario and one the government is aiming for, since the bill would go back to the Lower House. However, with the congressional year already going into overtime, there wouldn’t be time to debate the modified bill until at least the beginning of next year’s sessions, and the time between now and March 1st — when the Congressional year begins — could very well be a century in Argentine politics. “If we modify it, we would be playing for the government’s side because the law will die in the Chamber of Deputies,” a Senator who requested to remain anonymous told Clarín.
Gets struck down
This would only happen if more than half of the Senators vote against the project, but this isn’t very likely: with so much at stake no one wants to be the bad guy.
Unsurprisingly, the analysis over the initiative that prevailed last Wednesday couldn’t differ more. Led by Renewal Front (FR) leader Sergio Massa, representatives from the opposition argue it is their project that actually benefits workers, since it exempts a million employees from paying taxes. In fact, “salary is not profit” is one of their rallying cries that unions, who have been demanding a reform for years, share. Moreover, they argue the government doesn’t support the initiative because it would mean taxing powerful sectors like the gambling and mining industry.
In contrast, the Government assures the public that the project is completely nonviable because it would cause a fiscal deficit that would cause the State to go broke effectively, sending it into an economic crisis. According to some preliminary calculations from the AFIP tax collecting agency, the difference between the money the State would stop collecting through the income tax from the workers in question and what the bill would generate with new taxes on gambling and mining activity is larger than AR $20 billion. How would that difference be covered? Unknown.
After last Wednesday’s voting, practically all the government’s guard dogs came out to heavily criticize the decision: Macri called opposition representatives “irresponsible” and said he hoped governors would be the voice of conscience, Buenos Aires Province María Eugenia Vidal expressed herself along the same lines and Cabinet Chief Marcos Peña said Massa is the “least trustworthy person in Argentine politics.”
Overall, the argument is that practically all who gathered to pass the initiative were part of the same administration (under Kirchner) that over a decade refused to act on the needs when there was actual accountability. And those who weren’t part of it are sleeping with the devil to score some political points. After all, they don’t have to figure out how to face this new expense. The clearest example: Deputy Margarita Stolbizer, now close to Massa, supported the same project as Máximo Kirchner, facing corruption charges she herself pressed against both him and his mother, former President Cristina Fernández de Kirchner.
As in every good political TV drama, the season finale holds the final showdown. And it seems like this season of Argentine politics was written by Aaron Sorkin. Stay tuned.