Milei tries to approve new Basic Law and tax package, “disastrous” for workers

The government is ready to begin a new attempt to approve the much-debated “Basic Law” and the fiscal package, with the hope of obtaining half-sanction and advancing in the Senate. These regulations provide for labor reforms, changes to Income Tax, privatizations, delegation of powers to the Executive and reduction of withholdings, among other aspects. After several concessions, the governing party shows confidence that the Executive Branch’s initiatives will be successful, but the path to get there will not be easy.

With more than 30 hours of debate planned and around 150 speeches expected, the Chamber of Deputies is prepared for an intense period of discussions. At around 12:25 pm, the quorum was reached with 135 deputies present, beginning the parliamentary work. The main text remained at 232 articles while tax measures added another 112 articles.

However, not all details of the work plan were agreed upon by the block presidents, resulting in the vote drawn up directly at the facilities, an unusual practice. The highlight is the proposal for a joint debate on the projects promoted by Javier Milei, where each legislator will be able to speak only once for both initiatives.

As for voting, the representatives of the friendly benches propose the modality by chapters and by name, aiming to guarantee transparency and precision in the process. However, delicate issues, such as the refund of the fourth category of Profits, continue to generate disagreements, especially between the Patagonian provinces.

The president of the Chamber, Martín Menem, faces the challenge of leading the debates while dealing with the flu that affected him over the weekend. Determined to move forward with the proposals, Menem intends to prevent the debate from extending until Wednesday, when unions plan mobilizations for Labor Day.

The tax package includes measures such as the laundering of unregulated capital, a new tax moratorium and changes to the maximum turnover limits provided for in the monotax regime. The “Basic Law” addresses issues such as limited labor reform and an incentive regime for large investments.

The limited labor reform omits those articles that generate conflict with CGT leaders, such as the elimination of the so-called “solidarity quota” that finances union funds. The incentive regime for large investments includes a series of fiscal, customs and tax benefits for large companies as well as the possibility for the Executive Branch to declare a dozen public companies subject to privatization.

At this point, that of privatizations, the party in power had to backtrack on its plan to privatize Banco Nación and subsidiary companies, including Nación Seguros.

Despite expectations of rejection by the opposition, the blocs that collaborated with the government’s objectives will adopt a more active stance, promoting issues previously left aside. The path to approval, however, remains uncertain, with several issues at stake and an intense political clash in sight.

Repercussion on the opposition

“It’s a disastrous law for workers! I’m surprised they say it’s a light law. They only removed the articles that bothered big businessmen, those in agribusiness. Against workers it is not light and attacks women in a particular way”, said the deputy of the Left and Workers Front (FIT), Myriam Bregman.

“They include a reform entitled ‘Labor Modernization’, but in reality it is a huge step backwards. It’s very serious. They are trying to destroy public employment. With the approval of this rule, the same rights that were in the DNU and that Justice ceased through a precautionary measure are removed”, added Rodolfo Aguiar, general secretary of the State Workers Association (ATE).

Eduardo Valdés, national deputy for the Unión por la Patria (UxP), said that “we hope to be able to cancel it”. “It is a law that tries to give powers to the President in economic, financial and energy matters, when he himself says he hates the State. Are we going to give power to someone who hates the State to destroy all these issues?”

During the session, they will promote issues refuted by the party in power, such as the recomposition of retirement benefits with inflation since January, the dismantling of special regimes such as Tierra del Fuego, educational financing and the increase in the tobacco tax for all the companies

Leaders of the Left and Workers Front (FIT), social organizations and protesters today called for protest mobilizations in front of Parliament. Thus, from the early hours of this morning, a strong operation led by the Nation’s security forces began.

The Kirchnerist senator from the Justicialist Party (PJ), Mariano Recalde assured that they should wait and see what happens, because perhaps they “don’t have to worry”, insinuating that the law could fall in this first instance, as happened with the omnibus law in January this year. “This can always happen, I don’t lose hope and my colleagues are working to ensure that the law is not approved”, he considered.

Main measures

Delegations: A public emergency in administrative, economic, financial and energy matters is declared for one year.

Privatizations: At the last minute, the Executive removed Banco Nación from the list, which generated widespread rejection. Aerolíneas Argentinas, Energía Argentina, Radio y Televisión Argentina and Intercargo SAU are subject to full privatization. AySA, Correio Oficial, Belgrano Cargas, Sociedad Operadora Ferroviaria and Corredores Viales were subject to privatization or concessions.

Nucleoelectrica Argentina Sociedad Anónima (NASA) and Yacimientos Carboniferous Rio Turbio (YCRT) can only be mixed, with state control.

Pension moratorium:The social security moratorium approved during the Government of Alberto Fernández, by which people who did not reach retirement age could join a payment scheme and be able to retire, is revoked. However, at the request of the UCR, the Proportional Retirement Benefit was created, in which people who do not reach 30 years of contributions, upon reaching 65 years of age – when the Universal Elderly Pension (PUAM) begins to be collected – They also receive a proportional fee for the years they contributed.

Income Tax and Monotax:Income tax starts to be paid from a salary of US$1.8 million for singles and US$2.2 million for married people. After an arduous discussion – because the ruling party wanted the update to be annual – it was established that during the rest of the year the inflation adjustment (IPC) will be quarterly (in September) and then semi-annually.

The Simplified Regime for Small Taxpayers (Monotributo) updates the revenue and quota ceilings, with increases between 300% and 330%. The maximum annual revenue limit would be 68 million dollars, with the novelty that it will be allocated to both commerce and service activities.

Large Investment Incentive Scheme (RIGI): It is for investments equal to or greater than US$200 million. They get tax, customs and exchange benefits. Among them, a single Income Tax rate of 25% and the accounting of 100% of the Tax on Debits and Credits as payment on account of Profits.

Personal property: The changes include a reduction in the floor at which the tax starts to be paid and a reduction in tax rates. Under the bill, the nontaxable minimum will increase from $11 to $100 million and the family housing deduction will increase from $56 to $350 million.

There is a 5-year advance program with a reduced rate, which then allows for “fiscal balance”, with the taxpayer paying a very low percentage until 2038.

A benefit for defaulting taxpayers of half a rate point was included.

Money Laundering and Tax Moratorium: Laundering allows the regularization of undeclared assets up to US$100,000 without paying the special tax. Includes progressive rates of up to 15% for amounts exceeding US$100,000

In the first stage, which runs until September 30, 2024, the rate on the surplus will be 5%; in the second stage, until December 31, 2024, it will be 10%; and in the third, until March 31, 2025, 15%.

The moratorium will allow the payment of tax and social security obligations due from March 31, 2024 in up to 84 installments with various benefits such as forgiveness of all fines and up to 70% interest on outstanding balances, depending on the payment method.

Dissolution, merger or modification of public organizations: The project empowers the Executive to order the dissolution, merger, division, modification or total or partial transfer of bodies of the central or decentralized administration of the State. However, at the request of the opposition, a list was written with the bodies that the State “cannot touch”.

You cannot order the dissolution of CONICET; Malbrán Laboratory, ANMAT, INCAA, ENACOM, INCUCAI, Industrial Property Institute (INPI); the Nuclear Regulatory Authority (ARN), the National Commission for Space Activities (CONAE); the National Atomic Energy Commission (CNEA); the National Commission for University Assessment and Accreditation (CONEAU); the National Securities Commission (CNV); the National Institute of the Single Ablation and Implant Coordination Center (INCUCAI); the Financial Information Unit (UIF); and the National Institute of Agricultural Technology (INTA).

Interventions: The Executive has the power to intervene, for a period of one year, in decentralized bodies, excluding national universities, bodies or agencies of the Judiciary, the Legislative Branch, the Public Ministry and all entities that depend on them; the National Administration of Medicines, Food and Medical Technology (ANMAT); the National Council for Scientific and Technical Research (CONICET); the National Institute of Agricultural Technology (INTA); the National Administration of Laboratories and Institutes of Health “Dr. Carlos G. Malbrán” (ANLIS); the National Commission for University Assessment and Accreditation (CONEAU); the Financial Information Unit (UIF) and social security institutions.

Trust Funds: The Executive Branch is authorized to unify, modify or liquidate public trust funds. So that, as happened in February, this article does not fail the law, it was established, at the request of the opposition and above all the governors, that if a fund that was financed by a specific allocation is dissolved, they will participate. If a fund financed by a specific incomparable tax allocation is dissolved, the tax will return to the National Treasury. Another important point: the Subsidy Fund for “cold zones”, which benefits residential gas consumption in southern provinces, was excluded.

Labor reform: Among the main points, the trial period – currently 3 months – is extended to six months. With the possibility of collective work agreements being extended for up to 8 months in the case of companies with 6 to 100 workers.

Fines for unregistered work are eliminated. This applies if the employer formalizes workers without registration. The measure aims to encourage registered employment.

The creation of an indemnity fund (type UOCRA) for compensation. It will be optional by collective agreement. The possibility of taking out insurance is also included.