Argentina approves new extraordinary tax on large fortunes to alleviate effects of pandemic

Maximo Kirchner, an incipient Peronist leader, son of former president Nestor Kirchner and Cristina Kirchner, also a former president and current vice president of Argentina, scored his first clear political victory on Tuesday when he got the Chamber of Deputies to pass his lopromised project to tax extraordinary wealth, in the midst of a militant epic climate never seen since the beginning of the pandemic, which included mobilizations throughout the country and even a visit by half the cabinet to support him.

The initiative was unanimously rejected by all the great businessmen, including some very close to the government, such as banker Jorge Brito, which did not prevent his friend Sergio Massa, president of the Lower House, from forcing the end of his preventive isolation in order not to miss a session that had the heartbeat of the great political moments.

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The project also provided the government with a supplementary success, it managed to divide part of the opposition with the explicit adhesion of the deputies of governor Gerardo Morales, from the Radical Civic Union Party and of sectors that transit a gray zone like those led by Roberto Lavagna and Juan Schiaretti.

The political importance of the moment did not pass to anyone in the government, to the point that they staged in one of the halls of Congress an unusual photo with Massa and Máximo surrounded by strong Cabinet ministers, mayors and other important leaders of the Frente de Todos, the political alliance headed by President Alberto Fernández and VP Cristina Kirchner.

After the photo, the Vice President's son could not celebrate in the Congressional Palace because he had to isolate himself due to being in close contact with an infected person with Covid 19. He had been in the palace until 7 p.m. and met with government officials.

Máximo got 133 votes, only 4 more than the simple majority needed, and the help of José Luis Ramón's block, the brand new couple of Felpe Álvarez from La Rioja and Antonio Carambia from Santa Cruz and a handful of allies of the federal inter-bloc who are not always there when the government needs them.

But the big surprise was the support of two deputies close to the governor of Jujuy, the radical Gerardo Morales: Gabriela Burgos and Jorge Rizzotti, who had already backed the budget.

The debate that lasted 14 hours high the divide between the Frente de Todos and Cambiemos, the conservative party of former president Mauricio Macri, the former fighting for a contribution from the rich to the crisis, the latter considering it confiscatory and only useful to scare off investments, with a somewhat unusual network campaign.

"Personal assets were reduced between 2016 and 2019 and we ended up in the International Monetary Fund, unemployment and poverty increased. What discourages investment are bad governments", Máximo defended himself in the closing speech, which arrived after 3 a.m.

He also called for the tax to be a bridge "towards a tax reform in Argentina that democratizes taxes and is collected in the sectors that have to be collected".

The project will tax for a single time assets greater than 200 million pesos and will reach about 10 thousand taxpayers. According to the calculations of the government, it will allow the collection of 307 billion pesos, 1.1% of the GDP, which will be used mainly to support production and to face the pandemic. It will have rates that start at 2% and go up to 2.25% for those who add 300 million in their sworn statement (which would be the majority), 2.5% to 400; 2.75% to 600; 3% to 800; 3.25% to 1500; and 3.5% to 3000 or more.

The collection will have five specific destinations. 20% for the purchase and/or manufacture of medical equipment, vaccines and all other critical inputs for pandemic prevention and care. Another 20% for subsidies to SMEs and the same percentage will go to the Progresar integral scholarship program, managed by the Ministry of Education with the aim of supporting children in the school system.

Fifteen percent will go to improve the living conditions of the inhabitants of low-income neighborhoods identified in the National Registry of Low-Income Neighborhoods in the Process of Urban Integration (RENABAP). In all four cases, the government is obliged to co-participate the funds with the provinces, which perhaps gave an additional incentive to governors like Schiaretti and Morales to support the project.

Not so in the other 25% that will be turned over to YPF's natural gas exploration, development and production programs, which led to the rejection of the leftist deputy Nicolás del Caño.