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Argentina raises the income tax cap and exempts almost 1.3 million taxpayers

The Argentine Congress approved a tax reform that raises the ceiling from which income tax must be paid, which will exempt almost 1.3 million taxpayers, reported the official Senator Anabel Fernández Sagasti.

“It is an act of profound justice. It is a relief for those who earn less than 150,000 pesos (1,500 dollars a month at the daily exchange rate), almost 1.3 million workers,” said the senator, vice president of the Frente de Todos block, in press conference on Friday.

The tax modification comes when inflation reached 7.8% only in the first two months of the year, despite which the government maintains its annual guideline of 29%. Market consultants estimate it at 50% per year, according to data from the Central Bank. In 2020, the consumer price index increased 36.1%.

The reform was voted by the upper house around midnight on Thursday, with the support of 66 senators and one abstention. The opposition backed the initiative.

The tax measure is adopted at a time when the economy began to grow each month compared to the previous one, but it has been in a year-on-year recession since 2018.

In 2020, the economy contracted 9.9%, with 42% poverty and 11% unemployment, amid the coronavirus pandemic that has caused more than 57,000 deaths and almost 2.5 million infections since March 2020 .

“The objective is to stimulate consumption,” explained another leader of the ruling Senate bench, Carlos Caserio.

So far 2.3 million people pay income tax (income), out of a total of 8.5 million tax registered workers.

In a country of 45.4 million inhabitants, the basic salary is 21,600 pesos (214 dollars at the daily exchange rate)

The reform had been approved by the Chamber of Deputies with 241 votes in favor, no rejection and three abstentions.

“It is a measure of fiscal relief focused on the middle class. There are 44,900 million pesos (450 million dollars) that are going to return to the economy. Everything goes to consumption, to commerce,” estimated Sergio Massa, promoter of the initiative and Speaker of the lower house.

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