MercoPress. South Atlantic News Agency

Cristina Fernandez on campaign for October mid term elections hikes minimum wage 25.5%

The Argentine president also announced the mid year bonus will be exempt of income tax

The minimum wage In Argentina will increase 25.5% to 3,600 Pesos, President Cristina Fernández announced. The hike will be implemented in two phases, with the lowest legal salary rising to 3,300 Pesos as of August and 3,600 in January 2014.

The president in the midst of the campaign for mid term elections next October also said that, like in December, July’s half-year bonus will be exempt from income tax deductions.

“I have made the decision, like in December, to make this half-year bonus exempt from income tax,” implying a “huge effort from the state, which will forsake” some 2.5 billion pesos in revenue, Cristina Fernández said.

Cristina Fernández recognized it was “difficult to announce measures during an electoral campaign, when everyone makes promises they won’t keep,” but proudly asserted that “this is the highest minimum wage in all of Latin America.”

She claimed that under Kirchnerism’s ten-year administration, the minimum wage has increased 1,700%, with her late husband and presidential predecessor, Néstor Kirchner coming into power in 2003 with a minimum wage that was at 200 Pesos.

Admitting how taxes have become central to the campaign, Cristina Fernández added that “opposition parties promise that nobody will have to pay earnings tax or export taxes but they never explain how they are going to do that. I have to deal with numbers every day.”

Cristina Fernandez stated that the “great majority of” the “nine million registered workers do not pay income tax,” referring to those who earn under 6,939 Pesos if they are single and 9,597 Pesos if they are married with two children.

In March, the Argentine government implemented the 20% rise to the income tax floor it had announced in January, its first adjustment since 2011 despite double-digit inflation. That means a tax that was once reserved for the wealthiest earners is now paid by many salaried employees.

The president insisted that these “injections and incentives” provided by the state have served to “maintain and heighten the level of economic activity,” which has grown “4.9% so far this year,” adding that levels of consumption such as in the boosted “used car and new car” industries have benefited.

Cristina Fernández also referred to the state’s subsidies, and their effective value as an “indirect salary”, arguing, “imagine what fuel, gas, water bills would look like without these subsidies,” she said.

“The state subsidizes industrial activity, businessmen and homes and that has to be contemplated. We have the cheapest public transportation fares in Latin America.

“When it was in private hands, there wasn’t enough fuel for agriculture production and there were long queues in fuel stations across the country,” she said.

However the secretary-general of the anti-government CTA umbrella union Pablo Micheli insisted the minimum wage should increase to 5,180 Pesos.

The union leader said that “we need to sit down and seriously discuss what the price of the food basket should be and based on that what the minimum wage should be. The food basket has reached 7,000 Pesos so the minimum wage should now be 5,180 and 7,000 in December”.

“Highest minimum wage in Latin America”

Since Argentine in fact has basically two exchange rates, at the official rate the new minimum monthly wage is equivalent to 667 dollars per month. However at the blue or parallel rate the equivalent is 429 dollars.

This compares with Uruguay, 405 dollars; Venezuela, 390; Chile, 383; Brazil, 301; Peru, 269 and Bolivia, 172 dollars.