President Javier Milei’s government has sent to Congress a bill to lower the income tax threshold as part of a strategy to shore up government finances
The initiative, formally denominated "Impuesto a los Ingresos Personales," proposes lowering the income tax floor for employees from a monthly 2,360,829 to 1.25 million pesos.
The figure will be adjusted on a quarterly basis according to the inflation figures kept by the INDEC national statistics bureau as from April, along with new scales contemplating aliquot factors of between five and 35 percent.
New sums are also established for personal and family deductions with the floor for annual net earnings rising to 2,360,829 pesos, while 2,200,918 pesos may be deducted for spouses and 1,109,931 pesos per child.
Argentines who receive less than 15 times the minimum wage, or about 2.3 million pesos, have been exempt from income tax since October. The change was made by then-economy minister Sergio Massa, who was seeking to boost his popularity ahead of the presidential election he eventually lost to Milei.
Milei, a former deputy, voted alongside the Peronist government in favour of the income tax reduction proposed by Massa last year during the presidential campaign.
The libertarian lawmaker changed his position after seeing Argentina’s accounts, said Milei’s presidential spokesperson Manuel Adorni.
In an interview with the Noticias Argentinas news agency, tax specialist César Litvin shared his analysis of the bill, highlighting the progressive nature of the new scales as the main virtue of the initiative.
He indicated that the Milei administration is “dropping the previous government’s technique of taking the ceiling instead of the floor to apply the highest tax rates."
In contrast, with this change of norm, he points out, "when the wage-earner tops the income tax floor, the lowest scales are applied, given the progressive nature of the tax."
Further benefits noted by Litvin include the bill contemplating overtime, productivity bonuses and liquidity shortfalls, "all making for greater deductions and hence less tax payments."
Nevertheless, he stressed that the initiative does nothing for the self-employed "who are always left behind" when taxes are updated.
– TIMES/NA/BLOOMBERG
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