Starting next month, the government will raise the income tax floor for all employees in the fourth category, with both the Christmas and mid-year bonuses exempt from taxation.
The decision was leaked from the Economy Ministry on Thursday in response to repeated and highly publicised requests from Congress Speaker Sergio Massa, with the announcement formally delivered Friday morning by President Alberto Fernández, Economy Minister Martín Guzmán and CGT Secretary General Héctor Daer.
Economy Ministry sources said Thursday that the mechanism to be used would be updating the special deductions reducing the final sum serving as the basis of the calculation.
The current income tax floor for employees in the fourth category stands at 225,937 pesos.
“The draft decree to update the income tax floor also comprehends the updating of the special deduction in the original law in accordance with the updated wage projections,” a close aide of Guzmán told Noticias Argentinas.
At press time, there was still no word on the percentages whereby the deductions will be increased, which will be what will define how many workers escape income tax.
The measure will be implemented by a decree, which will also exempt the mid-year and Christmas bonuses from this tax, reports said, with more than 100,000 people set to benefit from the change.
Guzmán has come under fierce – and very public – pressure from Congress Speaker Massa, a key leader in the ruling Frente de Todos coalition who last week published a letter asking the minister to raise the income tax floor "without delay."
The Frente Renovador leader insistently repeated his request at an event in the Buenos Aires Province city of General Las Heras this week, prompting Guzmán to give some response while avoiding details.
Even if the minister accepted that the floor would be raised as from next month, the lack of details as to the mechanism lends no certainty as to the future pay scales of workers.
The annual updating of the income tax floor is required by law but the government has the power to modify the dates by decree.
Guzmán had sought to postpone it for the second half of the year but the pressures of one wing of the ruling coalition along with other political pressures obliged him to bring it forward.
Sources close to Massa told local outlets that “seeing is believing,” warning that an amendment to existing legislation would be sent to Congress if no decree was published.
The decree should be published "in the next few days," government sources told La Nación on Thursday.