MercoPress. South Atlantic News Agency

Pressed by unions Macri confirms promise to exempt end of the year bonus from income tax

Macri had promised to exempt the bonus from the tax, following the trend of the last four years, but changed his mind following advice from his economic team.

Half-year bonuses paid out this month will be exempt from income tax, Argentine president-elect Mauricio Macri announced, backtracking from statements he made on Sunday, when he said there was not enough money to do just that.

 Macri had promised to exempt the end-of-year bonus from the tax, following the trend of the last four years, but changed his mind following advice from his economic team.

But the president elect again shifted his stance this week following complaints from union leaders who said this was only the latest in a series of campaign promises it seems he will break once he is in office.

All those with a gross salary of up to 30,000 Argentine Pesos (approx 2.500 dollars) will not have to pay the tax, a decline from last year, when salaries as high as 35,000 Pesos were exempt from the levy.

Macri also vowed to send a comprehensive bill to Congress to raise the income tax floor and also modify all the tax brackets. This has been an ongoing battle of unions with the outgoing administration of president Cristina Fernandez, since inflation in the low twenties, rapidly exposed and integrated more wage earners to the tax scale.

Macri’s change of heart came at the end of a day in which leaders from key transport unions within the CGT umbrella organization as well as representatives from Kirchnerite and anti-Kirchnerite unions inside the CTA umbrella organization warned Macri that strikes and other protests could come quickly if he did not keep his campaign promise to reduce the tax burden of workers.

Over the weekend, Macri and his economic team had said that the budget was too tight to make quick cuts in the income tax.

They had also warned that the campaign promise to lift the restrictions on the dollar trade on the first day of his administration could be delayed, as financial stability had to be ensured first by increasing the amount of reserves in the country’s Central Bank.

“I want to announce that all workers whose pre-tax income is below 30,000 pesos will be exempt from income taxes in their end-of-year bonuses,” Macri said on Facebook and Twitter. “What we promised on the campaign trail will have a real and immediate effect.”

Macri also said he would send a bill “shortly” to Congress. “It’s a move that will reverse the damaging effect that inflation had on hundreds of wage-earners who are now paying a tax from which they should be exempt, or who are paying rates that have no relationship to their purchasing-power.”

While the announcement is in line with campaign promises, it is also backtracking of from Macri's economic team that had decided after days of restless meetings over what sequence of economic reforms should be followed in the first day of the new administration.