Javier Milei is one step away from crowning his first legislative victory. The bill to scrap the State, officially baptized as the Law of Bases and Starting Points for the Freedom of Argentines, was approved by the minimum in the Senate, in a marathon session marked by violent protests abroad. All that remains is for it to return to the Chamber of Deputies, where the discussion of the project began, for its review and final sanction.
Today, Milei has enough support for the Chamber of Deputies to give him the tools he requests to transform Argentina with his ultra-liberal economic model. If the deputies accept the draft modified by the Senate, the law will be approved and will go to the Executive Branch for promulgation. The lower house has a second option: to insist on the draft that the deputies approved in April, for which an absolute majority is needed, that is, the vote of half plus one of the members present.
Be it one option or the other, the final law will be far from the 664-article project presented by Milei in December, a few days after taking office as president of Argentina. The legislative minority of La Libertad Avanza—38 pro-government deputies out of a total of 257 and 7 senators out of 72—forced him to mutilate it. The original text lost more than half of the articles and was divided into two: the Base Law itself — which includes the chapters on economic deregulation, reduction of the State and incentives for large companies — and the fiscal package, with tax changes and a amnesty for evaders. These are the most important points of the law.
Superpowers to Milei
The law declares a public emergency for one year in administrative, economic, financial and energy matters. During this special period, the Argentine Executive will have legislative powers in those key areas, that is, it will be able to reform or approve laws without going through Congress. The Legislative Branch finally grants this tool to Milei, although for half the time he wanted and for a third of the subjects requested in the original December project.
Business privatization
Lawmakers have decided that most public companies are not for sale. Of the initial list of 41 companies presented by the Government, the latest version leaves only eight subject to total or partial privatization. However, it remains to be seen what happens with Aerolíneas Argentinas, Correo Argentino and Public Radio and Television: the Chamber of Deputies authorized their sale, but the Senate rejected it. The deputies have the last word.
Closure of state agencies
The Executive may close all public organizations except for twenty, which can only be restructured. The country’s main science and technology organization, Conicet, heads the list of exceptions. There is also the highest reference in infectious diseases, the Malbrán Institute; the organization that manages and promotes audiovisual production, Incaa; and the national genetic data bank, which stores information on missing people in order to determine the possible parentage of grandchildren kidnapped during the dictatorship.
Labour reform
Milei is about to obtain a labor reform that several of his predecessors, such as Mauricio Macri, tried without success, although it is inferior to what he sought. The Government defends that the planned flexibility will encourage the growth of formal private employment, which has been stagnant for more than a decade, but critics believe that it will make the labor market even more precarious and increase unemployment.
The new regulations contemplate that companies can hire employees for a trial period of six months, double the current one, extendable to eight months for medium-sized companies and one year for those with less than five employees. In addition, it allows you to have up to five people hired as autonomous collaborators, that is, without a dependency relationship.
The law offers benefits for employers who regularize their employees, but at the same time eliminates sanctions for those who employ people without a contract, by eliminating the special compensation they obtain today in court.
Incentive regime for large investments (RIGI)
This is one of the most controversial chapters. It guarantees tax, customs and exchange benefits for 30 years for investment projects exceeding 200 million dollars in strategic sectors such as energy, mining, agribusiness and technology. In addition, it offers regulatory protection to companies against future legislative changes: differences will be resolved in international courts.
The Government maintains that Argentina needs this generous regime to seduce large firms to bet on Argentina with long-term projects, but SMEs warn that it will harm them and destroy local employment.
Energy chapter
The bill proposes a major transformation of the energy sector to attract major global players and multiply the extraction of resources for export. The magnet is the Vaca Muerta formation, in the south of the country, which has the second largest reserve of unconventional gas in the world and the fourth largest oil reserve. The regulations reduce State intervention to a minimum, liberalize prices – currently regulated – and open the doors to free trade.
Tax amnesty
Tax evaders will be able to launder undeclared capital without paying fines, as long as the money entered into the Argentine financial system does not leave until December 31, 2025. The facilities provided for benefiting from the amnesty have set off the alarms of money laundering experts. money because it is considered permeable to the entry of illicit capital in a country with porous borders and cities hit by drug violence. Those who have held public office in the last ten years, as well as their spouses, parents and children, are excluded from money laundering. Nor will there be a second chance in the short term for evaders: those who enter the current amnesty will be prohibited from repeating until 2038.
Income tax
Last year, when he was a congressman, Milei voted in favor of eliminating the income tax, known in Argentina as profits, for some 800,000 high-wage workers. Now, as president, he wants to back down. The Chamber of Deputies approved that those who earn more than 1.8 million gross monthly pesos (about $1,950 at the official rate) pay it again, but the Senate rejected it. The Lower House decides.
Personal property tax (wealth)
The richest population in Argentina trusts that the version of the law approved in the Chamber of Deputies, which included a reduction in the wealth tax, known as personal property, will go ahead. This benefit was revoked this Thursday by the Senate and without it it reaches the final stage.
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