the main four economic and social changes that this legislation will bring

This Thursday, in an unprecedented debate since the recovery of democracy in Argentina in 1983, Vice President Victoria Villarruel had to apply her constitutional power to break the tie, and after laborious and dizzying political negotiations, to approve in the Senate the so-called Bases Law, the project that Javier Milei’s administration considers the “legislative foundation stone of its management.”

According to the criteria of

The Base Law will return for a second review to the Chamber of Deputies –which approved it in April – for the final sanction. But, since the senators introduced some changes, they will discuss whether to approve it with those adjustments or to stay with the original version approved a few months ago.

The riots began when protesters – who oppose the approval of the law – sought to circumvent the fence system set up to isolate Congress and were repelled by gas, rubber bullets and jets from tanker trucks.

The protesters reacted by throwing stones at the uniformed officers and at least two cars were set on fire, including one belonging to the Cadena 3 media outlet.

It is a very violent day, in 40 years of democracy I have never seen such repression

“It is a very violent day, in 40 years of democracy I have never seen such repression,” said opposition deputy Cecilia Moreau, confirming that five colleagues who accompanied the demonstration were hit by the gas.

The main weight of the rejection of the initiative was provided by Kirchnerism, which managed to align its 33 senators behind the challenge to a Government that they blamed for the fall in the purchasing power of salaries and for the increase in prices, poverty and unemployment.

What does the Bases Law consist of and why does it cause controversy in Argentina?

The approval of the Bases Law is a crucial step for the government of Javier Milei, which six months into its mandate has not achieved legislative support.

As it is, this is the first support from Congress for the Executive, whose small party La Libertad Avanza is a minority in both Chambers, with only seven of the 72 seats in the Senate.

That is why the legislative route was uphill. The Bases Law project foundered at the beginning of February in its first attempt in the Chamber of Deputies and to revive it the government made numerous concessions until reducing its original content from 600 articles to a third.

“Javier Milei went from starting in an ambitious and intransigent manner to becoming more moderate, now exposing a flexible and negotiating government that is willing to deliver concessions in exchange for the Bases Law being passed,” explains Lucas Romero, Argentine analyst and director of Synopsis Consultores.

The content (of the Base Law) is not even important anymore, it is important that Milei demonstrate that it has minimum conditions of governability

“Being, politically speaking, the weakest government in Argentina since 1983, starting in March, the government faced a new negotiation process for a much more limited law whose need to be approved lies in demonstrating that the Executive can pass laws “The content is not even important anymore, it is important that Milei demonstrate that it has minimum governance conditions,” the analyst added.

The plan of the libertarian president Javier Milei consists of a series of reforms that change the social and economic course of the South American country with ambitious legislation that seeks to deregulate the economy, reduce the size and social expenses of the State, privatize entities, lower some taxes and eliminate others, and, especially, grant broad powers to the Argentine president to manage an ultra-liberal turn in one of the most nationalized and interventionist economies in the third world.

Here we analyze the four main changes that the law will bring, if approved.

1. Javier Milei will have legislative powers

In the “particular” discussion of the ten titles, the senators approved the controversial delegation of legislative powers to the ultra-liberal president.

“Do you really want us to delegate legislative powers to improve the functioning of the State to the president who says he loves being the mole who is going to destroy the State from within?” Senator Juliana Di Tullio said before the vote, quoting verbatim from a recent Milei statement.

This point will allow you Milei will have exceptional delegated powers in administrative, economic, financial and energy matters to be able to bypass the National Congress.

Milei will have exceptional delegated powers in administrative, economic, financial and energy matters.

“Legislative delegation is the exceptional and limited authorization that Congress can confer on the Executive branch so that it can temporarily exercise some of the legislative powers that the Constitution grants to the Legislative branch. Congress retains ownership of the delegated legislative power, can exercise it while the term of the delegation elapses and can even resume it in advance by repealing the law by which it is granted,” explained Argentine constitutionalist Alfonso Santiago.

Santiago made reference to the fact that during the period that the delegation lasts in certain matters or due to a public emergency, the president, with his signature and that of the Chief of Staff, can exercise legislative functions through decrees, as long as the provisions are complied with. by Congress in the delegation law, what is known as “the bases of delegation.”

2. The controversial incentive for large investments was approved

The Argentine Senate also approved a controversial incentive for large investments that offers tax, customs and exchange advantages for 30 years to foreign capital greater than 200 million dollars.

“We are giving a blank check that we do not know how much it will cost for 30 years, in addition to the priority in the use of natural resources,” questioned Senator Martín Lousteau.

The American magnate Elon Musk, who participated on Wednesday in a video conference in which Milei presented his economic theory, encouraged Argentines to “give their full support to the president to carry out this experiment because clearly the policies of the past did not work.”

Owner of the electric car manufacturer Tesla, Musk has met with Milei a couple of times and has shown interest in Argentina, which is one of the world’s main reserves of lithium, key for the manufacture of batteries.

3. If the Bases Law is approved with the Senate modifications, more people will have to pay the Personal Property Tax

If the Lower House fails to approve the modifications promoted by the Government for the so-called Personal Assets tax scheme, On the next due date, corresponding to the tax for 2023, those who have had assets valued at $27,377,408.28 or more Argentine pesos as of December 31st must pay taxes. For housing, meanwhile, an exemption of $136,887,041.42 will apply in such case.

The ruling party’s proposal, rejected by the Senate, includes raising the floor of the taxable assets from those little more than $27 million to $100 million pesos and the exemption for the property used as a home to $350 million (market prices are not considered). , but the valuations according to the specific rules that govern this tax).

The proposed change is substantial. And, pending a resolution of the issue by Congress, the Federal Administration of Public Revenues (AFIP) last week ordered an extension for the presentation of the sworn declarations and for the payment of the balances resulting from them, for the tax from last year. Those due dates were going to be this month and were moved to August.

If the initiative is not approved (with which the Government intends to collect more immediately, given a voluntary regime to advance the tax for several years), Not only would more people pay taxes compared to what would happen with the proposed scheme, but also, as expected, compared to last year.

4. What did Javier Milei have to sacrifice for the Base Law to be approved?

To achieve the desired objective, the ruling party’s negotiators had to make numerous concessions, such as the elimination of Aerolíneas Argentinas, Correo and the public media of Radio and Television Argentina (RTA) from the article that enabled the Government to put up for sale or concession a total of seven public companies.

And among the 238 articles of the Base Law, the possibility of privatizing a handful of companies was approved, as well as a labor reform that extends the trial period and makes the dismissal compensation regime more flexible. “We came to transform reality,” said the ruling party Ezequiel Atauche when justifying the vote in favor of him.

Of course, The approval of the Bases Law and the fiscal package in the Senate, although with modifications, was the news that investors were waiting for after weeks of financial turbulence.

We hope that the Senate’s approval of the Base Law will translate into a rally today. Up to what level? It is very difficult to specify and we do not believe it is as simple as predicting the previous highs…

In response, free dollars fell $45, Argentine stocks opened with increases of up to 12% abroad and the country risk sank more than 100 points.

In the case of Argentine stocks listed on the New York Stock Exchange (ADR), the round began led by banking and energy papers. Banco Supervielle soars 12.7%, followed by BBVA (+8.2%), Edenor (+8.2%) and Banco Macro (+7.4%).

“Volatility prevailed in recent weeks in both the local and offshore markets. We hope that the Senate’s approval of the Base Law will translate into a rally today. Up to what level? It is very difficult to specify it and we do not believe it is as simple as predicting the previous maximums, but it is certain that it can reduce the losses caused by the uncertainty of recent weeks,” they noted from the economic consultancy Outlier.