President Mauricio Macri today announced the income tax floor will be raised by over 160 percent to AR$30,000. In laymen’s terms, people who earn less than the announced amount won’t have their earnings taxed anymore.
Argentina’s income tax floor was last reformed in 2013 and had not been modified since. Given that the inflation rate has risen significantly since then, the income tax has become a contentious issue, leading to major union strikes, for example. For more information on the income tax in Argentina, check out our very own Demian Bio’s handy guide.
The idea of raising the tax floor to AR$30,000 was actually vocally pursued by Macri’s former presidential contender, Victory Front’s (FpV) Daniel Scioli. Macri was more lukewarm on the subject, but has clearly come around since then. Back in December, he announced his intention to send a bill to Congress to modify the existing tax brackets.
Part of the impetus behind raising the floor is the ongoing collective bargaining negotiations – discussions between unions and government representatives over yearly salary raises and how these can accommodate workers’ purchasing power in relation to inflation. Macri met with union leaders last week and in fact said he hoped to reach middle ground and keep raises under 30 percent by passing a package of bills that would indirectly improve workers’ purchasing power. The measures included raising the income tax floor and eliminating the IVA tax on basic food goods considered indispensable to every household. So now he’s gone through with step 1, it seems.
“Many of us thought that we had to give more and do more, but these are stages,” Macri said. “What we are doing is a first step.”
The decree will be retroactively effective to January 1, meaning salaries earned since the beginning of the year will be affected.