The Argentine government sponsored whitewashing or ‘tax amnesty’ bill received half approval on Wednesday when the Senate passed the initiative by 39 to 28 votes, a bill which the opposition has labelled ‘immoral’. After seven hours of debate and over twenty speakers the line was clearly drawn between the Kirchnerite group and its allies and the rest of the House.
The controversial whitewashing bill sets a tax amnesty plan allowing undeclared dollar assets, both in Argentina and overseas, access to the formal market which involves the creation of tax-free certificates, the Real Estate Investment Deposit, CEDIN, and the Argentine Bonds for Economic Development, BAADE.
The government of Cristina Fernandez is short of hard currency, losing international reserves and needs a stimuli injection ahead of the October mid term election when it could lose the congressional majority it currently enjoys.
“The voluntary exteriorization of foreign currency deposits from overseas or in the country pretends a tool that will enable to continue on the path of growth and the creation of jobs”, said Senator Anibal Fernandez one of the main promoters of the bill.
The opposition argues that the bill only ‘paves the way for money laundering’ and makes a ‘mock of good citizens who pay their taxes and keep to the law”.
Senator Fernandez admitted that the idea is to recover idle, clandestine money outside of the market and which can help generate new real estate deals and with energy infrastructure. But he strongly denied that “illicit capitals could filter in because we have taken the necessary measures to ensure that their origin is not from money laundering or terrorism financing” and this extends to spouse and relatives.
But opposition Senator Gerardo Morales said the initiative will make Argentine, for ninety days, ‘a tax haven to benefit all those rogues that are taking hundreds of thousands of dollars out of the country”, while his peer Laura Montero described the government’s attitude as ‘cynical pragmatism’ since ‘in tax havens the money that is clearly abundant is originated from criminal activities”.
Senator Fernandez insisting on the defence of the bill said that “better than a devaluation of the currency is to have a valid alternative for the idle clandestine funds that can then join and participate in the economic life of Argentina”. He emphasized that the bill fits in the framework of the parameters established by G20 and according to Transparency International, ‘Argentina is one of 22 countries in the world which has approved the exchange of information on money laundering”.
But dissident Peronist Liliana Negre said the bill is a ‘fiscal immorality’ and warned it opens the path for a ‘narco-economy’ and creates a ‘quasi currency in dollars’.
Senators Ruben Giustiniani and Juan Carlos Romero said the bill was “unfair and absurd” and a prize for ‘tax evaders’, and at the same time all law abiding citizens will be awarded a plaque saying ‘stupid’.
Finally Senator Carlos Reutemann warned that the government is “hunting down those who purchased 5.000 dollars in one year, and at the same and in the same office is giving a clean diploma to whoever brings money which we don’t know how it was acquired”.
For this in the camp we have a saying added Reutemann: “the wise guy lives off the fool, and the poor fool lives off his work”. If the bill is finally approved it must also include “a clause reimbursing those law abiding citizens who paid their taxes and did not hide assets, acknowledging an economic compensation. That would be fair”.
The opposition for once has agreed on a joint rejection strategy and only a few days ago the main anti-Kirchnerite blocs announced they will seek to repeal the bill if they manage to regain control of Congress after October’s legislative elections.
“Once majority stakes in Congress change we will repeal laws” pledged Radical Party Ricardo Gil Lavedra while dissident Peronism lawmaker Enrique Thomas threatened to “show those who support the whitewash up, we are giving them time so that those who have doubts think about it.”
The bill approved by the Senate should be reaching the Lower House on May 29 when it is expected to be signed into law given the administration of Cristina Fernandez control of both Houses of Congress.