What’s Argentina’s Current Policy On Income Tax?
The last time the income tax floor was raised was in August 2013, when President Cristina Fernández de Kirchner signed a decree raising the tax floor to AR$15,000 for that particular bracket, meaning those workers who earned less would be exempt. Also, those earning a gross salary between AR$15,000 and $25,000 would see a 20 percent increase in their deductibles.
It was seen as a victory at the time, since the number of workers who had to pay that tax bracket decreased from 26 percent to 10 percent.
But then inflation rose… and the tax floor stayed right where it was. This meant that even though workers’ salaries’ grew to keep up with inflation, they were forced to begin paying the tax even though their purchasing power remained the same. So everyone lost.
Predictably, union leaders were outraged about the whole thing and began organizing strikes. There were three major ones (read about the first, second and third here) aimed at pressuring the government to listen to workers’ demands.
At first, the administration refused to negotiate. Cabinet Chief Aníbal Fernández said he understood why unions were upset and that “everyone could see” that change was necessary, but he explained that raising the income tax floor would result in a decrease in tax revenue for the national government, which would translate into less funding for social programs. “It’s a matter of solidarity,” he stated at the time. Adopting a harsher line, Economy Minister Axel Kicillof said the income tax floor “is fine where it is” and blamed unions and the media for making it look like the tax affected a large portion of the population, when in fact it only affected a certain bracket.
In the end, though, they finally caved. Kind of. In May of this year, the government signed a decree that reduced payments for those who earned a gross salary up to AR$25,000. The measure meant a 4 to 6 percent increase in the amount that workers pocketed at the end of the month, depending on whether they were married and had at least two children.
However, pretty much everyone agree this was a tiny measure and is clamoring for more substantial change. While most candidates today are proposing to raise the floor to at least AR$26,000 for this specific tax bracket, Sergio Massa promises to completely wipe out the entire bracket.
What Are The Candidates’ Stances On Income Tax?
Daniel Scioli – Victory Front
The FpV candidate’s stance on the issue came to public knowledge in a rather unusual way. In September, Antonio Caló, the leader of umbrella union General Confederation of Labor (CGT), alleged Scioli had promised him he would reform the income tax if elected to office: “He promised it to me. When we brought it up, Daniel told us he’d commit to restructuring the income tax in the long term if elected president,” he said.
A report from one of Scioli’s advisers, Miguel Bein, claimed that “saying only 10 percent of the workforce pays the income tax is not a valid argument to uphold a policy that generates inequality among workers’ salaries, which is aggravated every year by inflation as high as 25 percent.”
Mauricio Macri – Cambiemos
In a speech to businessmen at the Idea Conference on October 16, the Cambiemos candidate referred to the issue as one of the main problems he plans on tackling in order to attain his goal of eliminating poverty: “The employment rate has been stagnant for four years, half of Argentines earn less than AR$6,500, a third of employees are not legally employed [as in they’re paid en negro] and too many workers pay the income tax.”
“We’ll expand the economy and I’ll return workers their income tax so only those who earn the most pay,” Macri said during a rally in San Luis.
In a meeting organized by the Business Convergence Forum, Macri’s economic adviser Miguel Braun said the candidate plans on taking down the “2013 measure” since it raised the tax floor but also provoked inequality among workers. He proposed an income tax floor of AR$25,000 for single people and AR$35,000 for married couples with at least two children.
Sergio Massa – A New Alternative
Exempting all workers from the income tax has become one of Massa’s rallying cries. This distinguishes Massa from Macri and Scioli, who merely propose restructuring the tax, while he would eliminate it for the bracket outright. “As president, on January 1, I’ll raise every worker in the country’s salary because I’ll eliminate the income tax and the money that the national government takes away from you today will return to your pockets.”
He proposes taxing gambling and stock exchange profit to replace the money lost. According to Infobae sources, Argentina does not have a developed stock market and collecting taxes from it would prevent its growth.
Margarita Stolbizer – Progressive Front
Not only does Stolbizer agree on the need to restructure the specific tax bracket, but she’s proposing to reform the entire taxing system. “Our proposal doesn’t seek to increase taxes but redistribute the amounts people must pay. Our goal is to advance towards a more egalitarian distribution of income,” reads a passage from her proposal, which, among other things, promises to tax stock exchange profits and gambling.
When it comes to the income tax in particular, she promises to update the brackets within the first 100 days of her potential government.
Nicolás Del Caño – Leftist Workers’ Front
The Leftist Workers’ Front has always advocated wiping out the income tax for the working class: “We have to exempt all workers from the income tax and make those who have the most pay,” Del Caño has said.
“We propose taxing big fortunes to fund a public infrastructure plan that will provide an immediate solution to the housing deficit, which currently affects 3 million people,” stated Del Caño when consulted on the subject.
Adolfo Rodríguez Saá – Federal Commitment
Saá has agreed with the majority of the candidates about the need to raise the income tax floor for the specific bracket: “It’s extremely simple, we’ll sit down with unions and in less than two hours we’ll settle on a change in the tax floor. It’s dialogue, pure dialogue,” he said in an interview.