30/03/21

SOUTH AMERICA: Argentina looks to exempt 1.3 million people from income tax despite pandemic deficit.

As published on publicfinancefocus.org, Monday 29 March, 2021.

On Sunday, a bill that would double the minimum taxable income to 150,000 pesos (£1,180) a month passed without opposition in Argentina’s lower house, the Chamber of Deputies.

Pushed by speaker of the chamber Sergio Massa, the reform has been billed as a way to encourage consumer spending after Covid-19.

“We took a very important step to relieve millions of Argentines,” Massa said on Twitter after the vote.

“With 241 affirmative votes and three abstentions, the Income Tax Modification project now goes to the Senate.”

If approved, it would be backdated to the start of 2021.

Argentina recently introduced a one-off tax on the wealthiest 0.8% of its population to help the government pay for its Covid-19 spending.

The tax, on those with assets worth more than 200 million pesos (£1.6m) is expected to raise 300bn pesos (£2.4bn).

The South American country has been in an economic recession for three years now, and talks between the government and the International Monetary Fund on a rescue deal are slow but ongoing.

Any such deal would likely entail strict economic reforms.

President Alberto Fernández told a radio station the current $57bn deal with the IMF, agreed in 2018, is unpayable.

Under the current arrangement, Argentina must pay $3.5bn this year, $18bn in 2022 and $19bn in 2023.

“What chance do we have of paying $18bn next year? None,” he said.