Dealing with taxes and eliminating the PASO primaries – Milei’s agenda for coming months

The coming successful passage of Javier Milei’s flagship labour reform package is not just an achievement for the government – it’s the next step of Argentina’s “transformation” thanks to a Congress that is no longer seen as a “nest of rats,” as the President said on March 1, 2024.

The feeling within La Libertad Avanza (LLA) is that – thanks to agreements made with allies and social support that remains intact after the October 26 midterms, – there is more than enough margin to continue implementing changes described as “structural.”

Changes ranging from amendments to the National Glacier Protection Law (a fundamental issue for the libertarian administration said to enjoy consensus among the governors) to the Mercosur-European Union trade agreement and the new Juvenile Penal Regime lowering the age of criminal responsibility to 14. 

Ruling party sources say a package of legislation could be approved in the short term, including the new University Financing bill which, in government eyes, is superior to Law 27,795, which the opposition imposed on Congress.

There are two issues on the radar which the government needs to put to governors open to dialogue: an electoral bill to repeal the PASO primaries for elections and an initiative amending Central Bank statutes that aims to permit banks to grant dollar credits to individuals and companies not directly generating hard currency. 

The Economy Ministry still has no details as to a text capable of relaxing the restrictions imposed in 2002 after the crisis following the collapse of convertibility.

Key reforms

A proposed pension reform, which at one point the government tried to sell as a concrete possibility, will likely be held over for another time. “Not in this term” in office, a source close to Milei told the Noticias Argentinas news agency.

The reason is simple: in order to change the current pension system, the universe of registered workers must be expanded, given that four out of every 10 workers in Argentina are informally employed. The government is thus awaiting concrete results from the labour reform before advancing on the pension system.

Tax reform is the other big issue on which the government will start to work. A key pillar of its economic plan, Milei wants to bring order and lower taxes. La Libertad Avanza has great expectations for the debates to come.

After the passage of labour reform, the government will seek to approve its new  University Funding bill next month, banking on the support of governors who “understand Milei” – referring to Peronist leaders who lent their parliamentarians to sanction the labour reform.

In return, the government promises to listen and resolve the problems so that their respective provincial coffers, compromised by sinking revenues, do not suffer. 

There is another factor which has not gone unnoticed in the Casa Rosada, making it possible for Milei to accelerate and get results. “There’s no opposition,” said a government source.

Acceleration

La Libertad Avanza’s shopping-list of bills following passage of the Labour Modernisation Bill leads with the Glacier Protection Law, the new Juvenile Criminal Regime and the approval of the EU-Mercosur deal. 

Milei’s government has renewed momentum following the imminent approval of his Labour Modernation Bill. The text, which introduces changes in severance, modes of hiring and union dues (with a two percent ceiling), while creating the FAL (Fondo de Asistencia Laboral) fund, was expected to obtain final Senate approval yesterday.

Party sources say the victory reflects better coordination between leading government figures, including Presidential Chief-of-Staff Karina Milei, top advisor Santiago Caputo, Cabinet Chief Manuel Adorni, Senate ruling party caucus leader Patricia Bullrich and Interior Minister Diego Santilli – a contrast to last year’s struggles. 

The government also wants swift approval for its nomination of Fernando Iglesias as Argentina’s ambassador to Belgium and the European Union.

From next month, when normal session review, the focus will be on structural reforms: firstly, taxation – with a focus on simplification and being competitive – and then pensions in depth, this year or next, conditioned by the electoral scenario. 

Economy Minister Luis Caputo will insist on preserving his fiscal margins – a theme set to be heard in Milei’s State of The Nation speech this Sunday. Milei is riding high, boosted by lower inflation, fiscal adjustment and the opening up of the economy. He is expected to announce ambitious electoral reforms – the definite elimination of PASO primaries, changes in political financing and the introduction of the single ballot system.