By 41 votes against and 31 in favor, the Senate rejected the initiative proposed by the government of Javier Milei on the Income Tax which restored the fourth category and for which one million workers were going to pay the tax again.
«Title 5 of the law attempted to reestablish the fourth category of the income tax“, the tax on the income of dependent workers, which was eliminated in 2023 by the then minister Sergio Massa,” Ambito explained.
The proposal voted in Deputies indicated that the new non-taxable minimum would be $1.8 million gross for singles and $2,340,000 for married people with 2 children. It should be noted that this minimum, however, differs from the first original project, which was in the order of $1.2 million.
The minimum rate proposed was 5% of net profit and increased to 35% according to income level. Also sought to eliminate some exemptions, such as the differential for workers from the Patagonian region and overtime, but consider the payment of the bonus. It foresees an update of the scales starting in 2025.
If Deputies ratify the Senate’s intention and do not approve the changes proposed by the ruling party, the current floor for the payment of Profits will be maintained, much higher than the one proposed by the Government: $3,514,725 for a single person without children, that is, 15 minimum wages, indicated El Cronista.
It is worth remembering that in Patagonia, which includes Neuquén and Río Negrothere is a differential for the Patagonian area that increases the number by 22%, so the current floor for our region is $4,217,670.
Milei’s project did not initially contemplate it, although it later emerged that he had agreed to the request of the Patagonian governors to raise the tax base in his proposal to 22%, in exchange for the favorable vote of the region’s senators.
What happens to the Income Tax after the rejection in the Senate
Now, both the fiscal package and the Base Law will return to the Chamber of Deputies with the proposed changes, so it will be able to insist on the original project or ratify the provisions of the Senate.
According to the Congressional Budget Office (CPO), if the Earnings bill had been approved as the rejected proposal, a 0.41% extra GDP (vs. 0.5%), however, now the project is in suspense: if Deputies do not insist, it could fall definitively, reported El Cronista.
In particular, the changes on Profits implied returning to the previous regime and expanding the universe of taxpayers, although with more regulated scales.
With information from El Cronista and Ambito.com
