After four hours of debate and amid violent protests against pension reforms, Argentina's Chamber of Deputies passed a new tax reform at 1am Wednesday.
Argentine Protests Intensify As Pension Reforms Are Passed
The legislative proposal sent by the Executive received 146 yes votes, 77 no votes and 18 abstentions. Next week, the reform will be sanctioned by a Senate comission.
Ruling party legislator Luciano Laspisa presented the bill, saying its main objective is to reduce the deficit and to "lighten the burden on small and medium-sized enterprises and the middle class."
The new law implements a tax on financial income, 5 percent for fixed-rate interests on argentinian pesos and 15 percent on foreign currency.
It establishes a new distribution system for 20 percent of income tax revenue, previously destined to the National Social Security Administration, which is now divided between the federal and local governments.
Furthermore, the law eliminates The Greater Buenos Aires Fund, financed by 10 percent of income-tax revenue and used to pay for infrastructure projects across the region.
It exempts investors who do not reside in Argentina from paying income tax; reduces the rate of income tax paid by companies that reinvest their utilities in the country from 35 percent to 25 percent, and also modifies consumer taxes on various products.
In the case of consumer tax, the rates have been halved for poultry, beef, rabbit and pork; raised for beer, cigarettes and cellphone services, while a 12 percent tax on services such as Netflix and Spotify have been introduced.
Axel Kicillof, opposition legislator and former economy minister, criticized the bill because "it eliminates taxes for the rich and transfers it to the poor," in allusion to the reduction in employers' social security contributions and the elimination of contributions for workers with a maximum salary of US$670. According to Kicillof, the reform is part of a "neoliberal package" along with pension and labor reforms.