Argentine President Javier Milei scored a legislative victory on Tuesday when two of his key reform bills were approved in the lower house of Congress, paving the way for a massive deregulation of the economy and a simplification of the tax system to help balance the budget.
“This is a fundamental first step to get Argentina out of the quagmire of the last few decades,” Milei said on X after the deregulation bill was approved during a marathon floor debate that started on Monday and ran on for 30 hours.
The deregulation bill, or Bases Law, is designed to deregulate the economy, including with changes in labor regulations to weaken union powers, and to privatize state companies like the flagship airline Aerolíneas Argentinas. Several such companies will be offered to the private sector under concessions, including water utility Agua y Saneamientos Argentinos, cargo railway Belgrano Cargas y Logística and the Argentine post office.
Milei’s right-wing ruling La Libertad Avanza party conceded several changes, including removing Banco Nación, the country’s biggest bank, from the list of state companies to be privatized under the bill.
The concessions were enough for the deregulation bill to pass in both the general and line-by-line votes. A previous attempt to pass the bill was quashed during a line-by-line vote in February, handing Milei a major loss just weeks into his tenure.
FISCAL REFORM
The fiscal reform bill, meanwhile, calls for simplifying the tax system, reinstating income tax and holding a tax amnesty among other changes, with the aim of slashing public spending and taking the primary fiscal account to a 2% of GDP surplus this year from a 5% deficit in 2023.
“This fiscal package is the first brick on the path to a much more reasonable, clear and crystalline tax system,” said José Luis Espert, a La Libertad Avanza congressman, economist and former presidential candidate, during the televised debate. “It will be a process that must reduce the 150 taxes that Argentines pay” to no more than about 15, he said.
Santiago Santurio, another ruling party congressman, said the reforms will spur private sector growth. “The objective of this law is that families, entrepreneurs, executives can develop their full potential,” he said during the debate.
There was opposition to the reforms, with some detractors saying privatization will destroy the companies and arguing that the tax amnesty will abet tax dodgers and the labor reform will strip workers of many rights.
But even some opposition lawmakers threw their support behind the two bills.
Karina Banfi of the liberal centrist Unión Cívica Radical, one of the country’s oldest political parties, supported the deregulation bill, saying that “it proposes profound changes and allows us to have a roadmap and gives us hope.”
The bills now go to the upper house for a vote, where there may be more opposition.
On Tuesday, Axel Kicillof, a former national economy minister and now the governor of Buenos Aires province, said he will rally others in his left-leaning Peronist coalition, which ruled Argentina for most of the past century, to vote against the bills.
“We are going to exert force so the law does not pass in the Senate,” he said on X.
[PHOTO: Lawmakers debate two reform bills in the lower house of Congress in Buenos Aires. Source: Chamber of Deputies]