Deputies hope to ratify the Senate changes, although they are concerned about the eventual elimination of Profits

Deputies hope to ratify the Senate changes, although they are concerned about the eventual elimination of Profits
Deputies hope to ratify the Senate changes, although they are concerned about the eventual elimination of Profits


Exhausted to the point of exhaustion with the negotiations in Congress to sanction the Bases Law and the fiscal reform package, the Government trusts that the Chamber of Deputies, more “friendly” than the Senate, ratify in total the modifications agreed upon in the upper house to be able to exhibit, as soon as possible, the first two laws passed under Javier Milei’s administration. A loose end threatens, however, the official strategy: the possibility that senators will reject the reinstatement of the income tax.

Indeed, if a majority in the Senate eliminates the replacement of this tax from the tax reform project, the ruling party in Deputies will have no alternative but to reopen the debate on the articles when the text returns to the Lower House to try to reincorporate it. This is an instance that the Government would prefer to avoid in its desire to close the legislative process as soon as possible, which has already taken almost six long months. The threat of a new delay, this time in the Deputies, would be a a terrible sign in terms of the governance that the Casa Rosada intends exhibit before the red circle of businessmen, investors and international organizations.

The reimplantation of this tax is key not only for the provincial coffers – as the Government wants to show – but also for the national coffers, especially in times of falling collection due to the effect of the recession on economic activity. According to Congressional Budget Office (CPO), the Income Tax reform would increase the collection of this tax by 0.5% of GDP based on the entire 2024 fiscal period. The increase would be 0.3% assuming an application of seven months during 2024.

Despite the benefits of income tax collection, A legion of Patagonian senators opposes its restitution as proposed in the text coming from Deputies: They argue that, with the non-taxable minimum floor of $1.8 million for singles and $2.2 million for married people, a good part of the salaried workers in the region – where the cost of living is higher than the country’s average – would be covered by the tax. When they raised their voice in the Chamber of Deputies, their claim did not prosper; In the Senate, on the other hand, they assert their specific weight (they gather 25% of the total members) and threaten to close ranks with the Kirchnerist blocs to reverse the tax in the chamber.

In the final stage of negotiations that begins this week in the Senate, the operators of the Casa Rosada would appear flexible to accept the barrage of modifications proposed by the dialogue opponents in order to approve the law. It is not guided by altruism but by convenience: once sanctioned, the Executive Branch will be able to amend everything that does not satisfy it. via article regulation or, in extreme cases, through the partial or total veto of the law. They are the constitutional tools that every head of state has when a rule does not satisfy them. However, there is no regulation or veto that allows the Executive to restore an article that has been deliberately eliminated by Congress. Hence the intransigence of the Government to accept that the replacement of Profits is rejected.

At the time, the Lower House approved this article with 132 positive votes, and everything indicates that, if the Senate were to eliminate it, the deputies will insist on replacing it. The problem would arise if the eventual rejection of the upper house occurs with two-thirds of the votes; It is difficult for the deputies to replicate such a majority in the chamber to insist on their criteria and reincorporate the tax.

“The ideal is that the text that is approved in the Senate returns to Deputies with modifications agreed with the Government. That would make it easier for us to approve it without further discussion. Then the Executive Branch will veto what it does not like. The problem is if the fiscal package comes without the article on Profits: in this case we would have to open the debate in committees, with the danger that the toughest opposition, in order to muddy the field, demands to review other articles, not just the of Profits. If this happens, the law will no longer come into force,” argued, with some concern, a high authority from the Pro bloc.

The deputies Miguel Ángel Pichetto and Florencio Randazzo

On the bench that leads Cristian Ritondo, even with their internal nuances, are in favor of approving without delay the modified half-sanction of the Senate so that the Executive Branch can then amend what it deems necessary via regulation or veto. The head of the radical caucus, Rodrigo De Loredois on the same page, although its authority has been losing weight within its bloc, disintegrated into different tribes that oscillate between those who agitate a ruthless offensive against the Government and those who suggest a critical alignment.

In We Make the Federal Coalition, the leadership of Miguel Ángel Pichetto It is also relative; The Civic Coalition, socialism and Margarita Stolbizer, who tend to follow their own political impulses, tend not to coincide with the organic profile that the Rio Negro intends to print.

In this context, the Government’s preventions and difficulties in sealing the Bases Law and the fiscal package are understood, a procedure that, with a good wind, He will only have one more month of parliamentary journey ahead of him until he sees the light.

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