“The zero deficit is not negotiated in any way. That is to say, they are going to have to take me out dead, from La Rosada, to manage to break the fiscal deficit.” The warning that Javier Milei made on Thursday in La Rural has already been internalized by the economic team. And, at this time, they are preparing for a new round around the Bases Law to reverse the rejection in the Senate of the increase in the Income Tax and the reduction in Personal Assets.
The initiatives are part of the fiscal package with which the Minister of Economy, Luis Caputo, seeks to increase collection by almost 1 point of GDP. According to their calculations, the reduction of the floor in Earnings to salaries of $1.8 million gross in single workers and $2.2 million in employees with two children contributes 0.4% of GDP, while Personal Assets, along with other measures, adds 0.5% of GDP, through a regime to advance payment for five years.
In this framework, from Economía they point out that the parliamentary debate “has not yet ended” and they are betting on a rematch in Deputies, where the two modified projects will be discussed again. They expect the changes to be rejected and the source versions ratified. Like Earnings and Personal Assets They were voted in the Senate by 37 to 35 by a simple majority, The ruling party with a simple majority in Deputies “insists on its text and it is law,” they say.
Caputo needs the resources to fulfill one of the promises he made last week, when he promised to reduce the PAIS tax from 17.5 to 7.5% once the reforms are approved in Congress. The measure is part of the agreement with the Monetary Fund and is a key signal to begin the exit from the stocks, but close to the minister they recognize that the emptying of the fiscal package “prevents” touching that tax due to its impact on the accounts.
The approval of the Bases Law and part of the fiscal package in the Senate aroused enthusiasm in Wall Street banks, where they celebrated the “first political victory” of Javier Milei in the midst of police repression of the protests. JP Morgan noted in a report that “softened” the large investment regime (RIGI) and privatizations, as the list was reduced, but warned that the “main setback” was the rejection in Profits and Personal Assets.
According to the United States Bank, the two changes represented an additional collection of 0.5% of GDP, while the moratorium and money laundering added another 0.2% of GDP. For taxpayers, the regularization of assets would no longer have the same appeal without the reform in Personal Assets. The fact is that, although the rejected point creates a regime to advance payments, it also provides for a reduction in the rates to reinforce money laundering.
In this context, Caputo’s team insists that the zero deficit is “non-negotiable.” They still do not hypothesize what would happen if Deputies fail to reinstate the heart of the fiscal package. And if they fail, only then will they see where the resources come from, while analysts already evaluate alternatives. ““Some taxes on fuels that have not yet been adjusted may increase and the tobacco tax will also add up.”said Santiago Bulat, director of Invecq.
According to Ieral, the fall of both reforms generates a collection loss during 2024 of between 0.23% and 0.75% of GDP. “Because these are taxes that are shared with provinces, the cost for the provinces for lower automatic transfers would be between 0.13% and 0.44% of GDP, while the loss for the National Public Sector (SPN) would be between 0. .10% and 0.31% of GDP,” estimated Marcelo Cappello, economist at the institute.
