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The Government revives the Profit and retirement formula projects of the first Omnibus Law to send them to Congress - Infobae
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El Gobierno reflota los proyectos de Ganancias y de fórmula jubilatoria de la primera Ley Ómnibus para enviarlos al Congreso
La iniciativa de Ingresos Personales preveía un piso salarial que devolvía a 800 mil trabajadores al pago de ese tributo. El cambio en el esquema de suba de haberes incluía aumentos mensuales por inflación pero también implicaría una pérdida de poder de compra
www.infobae.com
March 06, 2024
The Personal Income initiative provided for a salary floor that returned 800,000 workers to paying that tax. The change in the salary increase scheme included monthly increases due to inflation but would also imply a loss of purchasing power
By Mariano Boettner
142 Opening of Ordinary Sessions in the National Congress, Buenos Aires; Argentina, March 1, 2024. (PHOTOS: Senate Communication)
The Government will work this week, in a meeting with the governors this Friday at the Casa Rosada, on a roadmap to once again discuss in Congress the Omnibus Law that the Executive Branch tried without luck to sanction during the extraordinary sessions in January. Javier Milei 's officials will seek to insist before parliament with the same projects of restitution of the fourth category of Earnings and change of the pension update formula .
As Infobae learned from official sources that are involved in the renewed strategy that the libertarian government outlines to obtain support from the governors, at the table of the ministers who will be in charge of the negotiation with the provinces they believe that the modification in the formula of quarterly update of salaries and the Personal Income initiative that makes some 800 thousand employees pay the tax again had “good consensus” during the preliminary discussions. The dynamics in the Deputies ended up blowing up the bridges between the ruling party and the dialogueist opposition blocks and the law ended up shipwrecking.
Milei's call for a new negotiating round with the governors once again puts on the table some articles and measures that are related to the fiscal adjustment sought by Luis Caputo and that needed parliamentary support. To put it in large numbers: the failure of the first attempt to sanction the omnibus law had cost the Executive Branch almost 1.5% of the GDP of the total adjustment of 5 points of the Product that it needs this year, for losing the chance of an increase widespread withholdings, the restitution of Profits and changes in Personal Assets.
It is still not clear whether or not the full text of the second version of the omnibus law will be identical to the last version negotiated on the edge in Deputies, just before the ruling party decided to withdraw it due to the lack of support in the particular vote. At that point the initiative had already undergone a series of considerable changes . One of them, for example, was to eliminate the transfer of assets from the Sustainability Guarantee Fund (FGS) from Anses to the Treasury. It is not confirmed whether that article will appear again in the next attempt that the Executive will give to the megabill.
Regarding the fourth category of Profits and retirements, on the other hand, they believe that although they ended up being victims of the project's shipwreck, there was a level of consensus that would have allowed them to be approved in the lower house. In any case, the Government takes a shortcut: “We know that there may be changes, but they should not be significant ,” they mentioned to Infobae about those two projects in particular.
Photo on Monday of the facade of the Ministry of Economy in Buenos Aires REUTERS/Agustin Marcarian
Regarding the retirement formula , during the discussion in extraordinary sessions the ruling party had come to negotiate the repeal of the current scheme and the implementation of another that follows the evolution of inflation . In any case, it had been the subject of debate among economists and political leaders whether this model did not imply, in its implementation, "skipping" a month that would be a loss for assets. It was a hypothesis raised, for example, by the Congressional Budget Office (CPO), which played a very active role in the debate in committees.
“For the inflation increases that will be granted on April 1, 2024, the CPI for February 2024 must be used, since the CPI for March 2024 will be published by the INDEC between April 10 and 15, 2024, that is That is, after the month's payment cycle has started. In this sense, it is observed that in the connection between the current formula and the new index, the inflation of January 2024 would not be considered , "that body explained in a report during those weeks of parliamentary debate.
A conclusion reached, in this sense, was that the new formula would continue to represent a loss of purchasing power of assets, although less than with the current scheme . "The new index proposed by the bill, although it also presents a decoupling with prices since in practice it would take information two months late, by adjusting on a monthly basis and by using closer information for its update, allows the loss of purchasing power in relation to the increase in prices is less than that evidenced with the current formula.”
“The loss of real assets with the current formula amounts to 32.2% during the year 2023 , while the simulation of the application of the new formula starting in April 2023 would imply a decrease in real assets of 22%. , which, although it continues to reflect a loss, in comparative terms represents an improvement of 10 percentage points with respect to the current formula,” indicated the OPC, which is directed by economist Gabriel Esterelles .
Retirements were one of the spending items that were closest to the liquefaction effect generated by the inflationary acceleration. The consulting firm 1816 had estimated that the drop in real terms was 30% in January , while the Argentine Institute of Fiscal Analysis (Iaraf) calculated that a third of the total budget pruning in the first month of the year was explained by retirements and pensions. .
CONSIDERED
The Government had foreseen, in the initial fiscal correction sketch, that pensions would contribute 0.4% of the GDP of the 5 points required by the economic team to achieve financial balance. Private calculations have other numbers, which are explained by that liquefaction effect at the beginning of the year.
“At first, the Ministry of Economy said that it was seeking a reduction in pension spending of 0.4 points of GDP compared to 2023. According to our estimates, the liquidation of assets during the first quarter and the monthly adjustment since April will result in a reduction of the retirement and pension item close to 1.3 points of GDP ,” Analytica estimated.
In the case of Profits, the implication is also fiscal and involves the provinces . Of the total collected by this tribute, the proportion of distribution between the Nation and the governorates is close to 45-55 , which is why it appears as one of the key elements to unblock the negotiation between the Casa Rosada and the governors, in a context of fiscal squeeze that closed the tap of transfers to the provincial coffers in the last two months. The project that was made official by the now ruling party on January 23 implied that the minimum Earnings was $1,350,000 of monthly income.
A study carried out by the Argentine Institute of Fiscal Analysis (Iaraf) had estimated that in 2024 the fiscal impact of the elimination of the fourth category of Profits that Congress approved at the initiative of the then Minister of Economy Sergio Massa would be 0.83% of the GDP , of which 0.35% corresponds to the Nation and the remaining 0.48% of the Product to the combination of the provinces plus the Autonomous City of Buenos Aires.
The restitution of Profits was one of the tug-of-war between the provinces and the Casa Rosada, since in this way the Government could recompose tax revenues but in addition the governors would also get a cut as it was a co-participatory tax, unlike the PAIS tax and withholdings.
