(Bloomberg) -- Argentina will exempt millions of workers from paying income taxes, a dramatic attempt by Economy Minister Sergio Massa to improve his standings in next month’s presidential election at the risk of deepening the country’s fiscal hole.
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Workers earning less than 1.7 million pesos ($4,857) per month won’t have to pay income taxes as of October, up from the previous threshold of about 700,000 pesos, Massa said Monday in Buenos Aires. The measure means only 90,000 top executives and high-ranking managers across the country will have to pay the tax, he said. That’s less than 1% of total registered workers.
Massa is fighting to reach a second round in Argentina’s Oct. 22 presidential election after his Peronist coalition ended third in a primary vote last month. The official met with some of the country’s largest union leaders earlier Monday to introduce the measure and made the announcement during a rally in downtown Buenos Aires, where he called on voters to support him in the upcoming election.
“Workers will not pay any more taxes on their earnings,” the economy minister said.
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With Argentina’s inflation running above 110%, the Peronist government of President Alberto Fernandez has taken several spending measures in past months to try to contain the impact of higher prices and declining popularity, including pay bumps for public employees as well as larger social security checks for retirees.
Put together, the measures run against Argentina’s recent agreement with the International Monetary Fund over the country’s $44 billion aid program, which is meant to cut spending to narrow a fiscal deficit. Argentina finances this spending partly by printing money, a strategy that in turn fuels future inflation.
Without dollars and international market access, the central bank has already sent the government nearly 1.7 trillion pesos of direct financing this year to pay the bills — the highest level since pandemic spending in 2020, official data shows.
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