The approval of the Bases Law and the fiscal package, after six months and a costly learning curve for the ruling party, contains a paradox that is only now being analyzed by the Government and the dialogue opposition, which was in charge of negotiating so that the Early this Thursday morning the president has at his disposal the tools to execute his government plan. Those who most opposed its approval will at the same time be those who will reap the greatest benefits, some in the short term, others in the medium term and the rest in the long term.
The governors can be noted on that list Axel Kicillof (Buenos Aires), Gerardo Zamora (Santiago del Estero), Sergio Ziliotto (The Pampa), Ricardo Quintela (The Rioja), Gildo Insfran (Formosa) and Claudio Melella (Tierra del Fuego), whose senators and deputies voted massively against both initiatives but guaranteed valuable resources to face a year of shortages. Also, the CGT, which despite the public protests of the hard wing represented by Pablo Moyano and the unions with higher salaries, found a “friendly” labor reform, which did not touch the unions’ coffers, nor did it advance further on social works, and can serve as a lever to create new formal jobs, therefore, more contributors.
The tight vote in the Senate – which forced tiebreakers in extremis of Vice President Victoria Villarruel – and the sanction with a handful of votes more than the minimum in Deputies to restore the Income Tax and the changes in Personal Assets showed that the Milei Government had to make concessions to its original proposals, due to the granite unity that Kirchnerism demonstrated in both Chambers. The thing is that Unión por la Patria asserted its 33 senators and 100 deputies and despite the “defeat” represented by the sanction of the Bases Law and the fiscal package, the same governors and union members will be able to receive the “benefits” of both initiatives, without having lowered their flags.
This was one of the topics discussed at the meeting held at the Casa Rosada by a delegation of radical and PRO deputies, led by the president of the UCR bloc, Rodrigo De Loredo, who went to alert the Chief of Staff, Guillermo Francos. , that Kicillof is going to get more funds derived from the sharing of Profit, without being obliged to transfer part of those resources to opposition municipalities. “We set the cost and the votes and he alone gets the benefit.”they said after that meeting.
Why this warning? A report prepared by Nadin Argañaraz, who presides over the Argentine Institute of Fiscal Analysis (IARAF) which was accessed Infobae can be used to explain with numbers what this paradox is about, which generated the approval of the Ley Bases and the fiscal package, which mainly benefits those who were most opposed. It is a research work that puts numbers to it, while the pollster Federico Aureliofrom the consulting firm Aresco, proposed a qualitative look at the Nation-Provinces political relationship, which complements the cold econometric data.
“As a net result, the change in Profits implies a greater effective tax pressure for the economy, estimated at 0.5% of annual GDP. Indeed, in current currency, the increase is of the order of $3,100,000 million (…) Given that the Income Tax is a co-participatory tax, approximately 60% of the collected goes to the provinces and CABA, and the remaining 40% goes to the Nation. In effect, of the 0.5% of the GDP with the highest potential collection, 0.30% will go to the Provinces and CABA and 0.2% will go to the Nation,” described the president of the IARAF.
According to the report, for the Nation, “this possible 0.2% of GDP in additional annual revenue is equivalent to 5% of the total fiscal effort required to eliminate an annual fiscal deficit of around 4.4% of GDP. In December, the forecast of positive impact on revenue for this reason was double, that is, 0.4% of GDP.”
“What is evident is that the result of the reform is different by province, with the amount per inhabitant being the most appropriate for measuring the impact. If the extremes are taken, the inhabitants of Tierra del Fuego, Catamarca and Formosa would benefit the most from the distribution of the collection since they would receive an additional $115,000, $110,000 and $103,000 annually, respectively. For their part, the inhabitants who would receive the least would be those of CABA, Buenos Aires and Mendoza, with $13,600, $21,600 and $35,000, respectively,” the work highlighted.
He added that, on average, the additional transfer would be $67,500 per inhabitant. “The provinces of Santiago del Estero and San Juan would have an extra income from revenue sharing of $67,000 and $71,000, respectively,” described Argañaraz’s work. “In the case of provinces such as Catamarca and Formosa, the Income Tax reform is clearly favorable. If we take the case of Catamarca, the provincial government will receive an annual amount per inhabitant of $110,000, a figure that results from the combination of an extra income of $47.5 billion and a population of 429,500 inhabitants. This amount of money is much greater than the contribution that the Catamarcans will make who will have to pay a higher Income Tax as a result of the reform,” he concluded.
The work states that despite having cast more than 30 votes against, the province of Buenos Aires that governs Kicillof will receive an extra collection estimated at 378 billion pesos; Santiago del Estero (Zamora), which was voted against by its eight deputies, will receive 71 thousand; Formosa (Insfran), with three votes against, will have $62 billion; La Rioja (Quintela), with four votes against, 35 billion pesos; La Pampa (Ziliotto), which put two votes against, 33 billion; and Tierra del Fuego (Melella), which three voted against, $21 billion.
The 10 governors of Together for Change Maximiliano Pullaro (Santa Fe), Jorge Macri (CABA), Rogelio Frigerio (Between rivers), Alfredo Cornejo (Mendoza), Gustavo Valdes (Corrientes), Ignacio “Nacho” Torres (Chubut), Carlos Sadir (Jujuy), Leandro Zdero (Chaco), Marcelo Orrego (San Juan), and Claudio Poggi (San Luis) issued a statement that seemed to echo that paradox.
“We have worked hard with our blocs to approve the Ley Bases (Bases Law) that the Government requested from the National Congress. We believe that it is a useful instrument to comply with the change that the majority of Argentines voted for. As the National Government itself said, they now have the tools to begin a new stage that must be one of growth, investment and employment. There are millions of Argentines who support this, with extreme effort, and they need these changes to begin to be noticed in their daily lives and their economic well-being. That is the great challenge of the National Government from now on,” he indicated.
The rest of the governors had an attitude of collaboration and open negotiation with the Casa Rosada. There were agreements that allowed them to bring together key votes from Martin Llaryora (Cordova), Gustavo Saenz (Jump), Hugo Passalacqua (Missions), Rolo Figueroa (Neuquen), Alberto Weretilneck (Black river), Claudio Vidal (Santa Cruz). And with the two Peronists who disengaged from Kirchnerism: Osvaldo Jaldo (Tucumán) and Raul Jalil (Catamarca). They contributed their own votes, removed legislators from their seats to facilitate approval or “contributed” key abstentions.
The behavior of the governors, both those who fought to prevent the approval of Bases and the fiscal package – even knowing that they would be able to reap the benefits of its approval – and those who pushed for its approval responds to a political panorama that provincial leaders register on a daily basis. The political analyst and pollster Federico Aurelius He revealed that in the polls he conducts in the interior “the majority will of the people is for the governor to have independence from the national government, but not to be an opponent.”
“They don’t want them to be allies, but much less want them to be opponents. The prevailing opinion is that the governor has independence, but that he maintains a good relationship with the national government. Secondly, that he be an ally and, lastly, that he be an opponent,” explained the head of Aresco, who has just concluded a survey that gave Javier Milei a support of around 56%, at the same level as what was obtained in the second round and at the beginning of his administration.
In this work, public opinion regarding the Base Law was also analyzed. “When I ask about some specific issues of the Base Law, there is more disagreement than agreement. People express ‘I want to support the national government’, but there is more disagreement about the increase in the Income Tax, extraordinary powers, privatizing public companies, labor reform,” explained Federico Aurelio.
This social rejection may give rise to the position expressed by the six governors, who hope that when the content of the measures begins to be implemented, they will be on the side of those who opposed their approval, regardless of whether they are dependent on the benefits that, in terms of fiscal resources, they may have.
“What are the people of Buenos Aires going to think that Axel Kicillof is against the Income Tax and then is the main beneficiary? They will consider that they disagree more, it will not depend on Kicillof. Likewise, in the cultural battle that Milei raises there is a new situation: a year ago it was unthinkable that privatizing public companies would have 40% agreement, or giving extraordinary powers to a president, a labor reform or restoring a tax such as Profits. This supposes ‘Milei represents this, I support Milei and therefore I have to think like him’. Everyone is not convinced, 55% who voted for him are not convinced, but 44% of the total are convinced. This is new,” explained Federico Aurelio.
This is the basis that gives Milei the strength to argue with political strength and match a board where he plays without his own governors and with minority representation in both Chambers of the National Congress. And with what he achieved, almost seven months after taking office, his first parliamentary victory.
