Argentina’s Minister of Economy announced a new update of the floor above which income tax is payable, but neither the tax brackets nor the due deductions will be increased.
Minister Sergio Massa’s economic team announced that from November 1, the minimum non-taxable income tax rate would be increased to ARS 330,000 (US$2,159).
It determines the line under which the tax is not levied.
It is an increase of 17.52% compared to the previous floor of ARS 280,792, which had been set in June by former Minister Martín Guzmán.
Despite the accelerated inflation, the increase is lower than the 24.27% determined in June.
Had the minimum non-taxable income been duly adjusted according to the RIPTE index (average remuneration subject to contributions to the Argentine Integrated Pension System), it should have been increased to ARS 344,800, 4.5% above the amount actually approved by the government.
Likewise, the INDEC confirmed that retail prices increased by 66.1% between January and September 2022.
Still, if the new floor for earnings of around ARS 330,000 is confirmed, the accumulated increase on this item would reach only 47% and lose against inflation.
Since 2018, the Earnings Tax ceased to be adjustable at mere discretion and came to be governed by RIPTE updates.
However, as salaries were systematically adjusted below inflation and lost purchasing power since then, the same happened with the tax scales.
The Minister’s measures were not satisfactory in compensating for the economy’s volatility.
Massa determined an increase on the income tax floor, but no update on the nominal tax scales or the reference deductions was announced.
Massa’s update does not compensate for the significant deterioration experienced since the last fixing of scales in December of last year for those people who are above the minimum floor and pay income tax and pay income tax.
Both the scales and the deductions will have an update by RIPTE scheduled for next January, but until then, the economic team did not announce any tax relief to compensate for the high inflation and the implicit increase of the income tax as a consequence.
With information from Derecha Diario