MercoPress. South Atlantic News Agency

Argentine Lower House approves tax moratorium

The Lower House of Argentina approved early Thursday a controversial bill that would establish a moratorium on unpaid taxes and give tax opportunities to Argentines who repatriate money and assets held overseas.

The bill was approved a 132-83 vote early Thursday morning and now must be considered by the Senate where the government's majority is not so clear. Some opposition Senators have warned that the bill could encourage money laundering and end will do little to help Argentina overcome the global economic crisis. Lower House Deputy Patricia Bullrich said the bill, which appears to allow people to repatriate money without explaining its origins to the national tax agency, AFIP, benefits those whose cash could be of questionable origin. "This bill should be called the 'crisis of power bill' because it enforces measures whose only objective is to improve the federal cash revenue while disregarding the fact that this is going to allow people to launder money from narco-trafficking, terrorism and corruption," Bullrich said. Speaking for the majority Deputy Agustin Rossi said the tax moratorium means that "who didn't pay, will pay in a different way, that's all". The bill would reduce taxes to between 1% and 8% from around 35% in some cases on the repatriation of funds from abroad. According to various estimates, Argentines have well over 150 billion US dollars invested in overseas accounts. It also would establish a moratorium on taxes owed by companies before 2008. In some cases, the bill would wipe out lawsuits against these companies and reduce the amount of interest they have to pay on unpaid taxes. In other cases, the bill would cut the amount of taxes due by as much as 70%. A third key aspect of the bill encourages companies to bring informally-contracted workers - those who don't pay taxes - into the formal labour market. This would allow companies to bring ten employees into the formal labour market without having to pay fines or unpaid taxes on the workers. It also would allow the social security agency, ANSES, to assume the workers have paid into the retirement system for five years. Proponents say it gives workers an incentive to pressure their employers to offer them formal, taxpaying contracts. Government officials hope the bill will boost tax revenue at a time when many economists are forecasting it will decline rapidly next year amid an economic slowdown. The bill is part of a package of initiatives from the Cristina Fernandez de Kirchner administration to boost the economy including a 21 billion US dollars public works program and additional sums for credit consumption. During 2008 according to Buenos Aires economic analysts an estimated 20 billion US dollars fled from Argentina given the political instability and unorthodox practices of the Kirchner administration. On the back of surging commodity prices the Argentine economy expanded above 8.5% on average between 2003 and 2007, but this year is expected to mellow to 7% and next year, 4%.