Welcome to our new section, “What’s the deal with…,” a comprehensive guide to understanding the most complex issues in Argentina. And by “most complex” I obviously mean “regular issues” that pretty much everyone understands except for you because you’re too lazy to care and/or read about them. So in order to become the martyrs of your ignorance, we have decided to format stories in this section in the shape of a Q&A for dummies. Got it? Or maybe you need to read it again in order to understand. No, that’s OK. Take your time.
Ready? OK, let’s do it.
- What’s the hell is an “income tax” and why is this the first time I hear about it?
The income tax is a tax that governments impose on higher income earners. Meaning that those people pay a higher tax rate compared to their lower earning counterparts. The reason why you’ve probably never heard of it is because you’ve never had to pay it, which pretty much means you’re poor.
- I don’t even work legally in this country so joke’s on you, I don’t pay any taxes. Why is it all over the news in Argentina today?
Because yesterday, after a long, long time, President Cristina Fernández de Kirchner announced that she would sign a decree in which she would give in to the workers’ demands and raise the income tax floor to $15,000 pesos. Meaning that starting September 1st, workers earning a gross salary of less than $15,000 a month will not have to pay any income tax. Also, those earning between $15,000 and $25,000 pesos would see a 20 percent increase in their deductibles. Oh, and regarding your last comment, you’re working illegally and should be deported.
- But wait. $15,000 a month doesn’t really sound like a lot of money if you take into consideration the ever-rising cost of living in this country. Are you saying that the income tax floor was below that?
- Go on…
Until now, the income tax floor was set to $8,360 pesos a month for individual workers, and $11,563 pesos a month for couples with children.
- So a worker making $8,400 pesos a month was forced to pay income tax?! That’s crazy!
It kinda is. In fact, that’s one of the reasons by union leader Hugo Moyano, who had always been a strong ally of the Kirchnerite government, decided to officially end his relationship with Cristina last year after his multiple demands to significantly raise the income tax floor were not met.
- So is this good? I assume a lot of low-income earners will be happy because they will now be making more money…
Yes, it’s good. The initial reaction from the political opposition was mostly positive, although many said that this was clearly a desperate move by the National Government to score some political points after their disappointing performance in the PASO elections this month. The Government obviously denies this and claims that their decision is based on the need to help those in need.
- What are the PASO elections?
We’re not getting into that. Go and do your research.
- Anything else I should know?
Under this new regulation, only 10.2 percent of employees and 0.7 percent of pensioners will pay income tax in the country.
- That’s great. Now I will be able to have a normal conversation with people without sounding like an idiot.
That’s the idea!
- Can I buy you a drink?
Don’t push it.