Argentina introduces ‘millionaire tax’ to pay for coronavirus

Argentina’s Senate passed a tax on about 12,000 of the country’s richest people on Friday to pay for coronavirus measures including medical equipment and relief for the poor and small businesses.

In a session that was streamed live on YouTube, and after a long and polarizing debate, the so-called solidarity contribution was signed in law with 42 votes for and 26 against, as the governing coalition allied its majority.

President Alberto Fernandez’s government hopes to raise 300 billion pesos ($ 3.75 billion) with the one-time fee, which previously passed the House of Representatives by 133 votes to 115.

Argentina’s 44 million people have been hit hard by the coronavirus, with more than 1.4 million cases and more than 39,500 deaths, according to figures from Johns Hopkins University.

The pandemic has already exacerbated the high unemployment and poverty rate in a country that has been in recession since 2018.

Under the system – also known as “millionaire tax” – people with declared assets greater than 200 million pesos will pay a progressive interest rate of up to 3.5 percent on wealth in Argentina and up to 5.25 percent on wealth outside the country.

Of the revenues, 20 percent goes to medical equipment for the pandemic, another 20 percent to small and medium-sized companies, 15 percent to social development, 20 percent to student scholarships and 25 percent to natural gas projects.

Director of the tax agency Mercedes Marcó del Pont said it will affect almost 12,000 taxpayers.

“The tax reaches 0.8 percent of the total taxpayers,” says one of the authors of the project, legislator Carlos Heller.

“Forty-two percent have dollarized assets, of which 92 percent are abroad.”

He said the plan was “far from taxing productive activity.”

On the other hand, Daniel Pelegrina, president of the powerful Argentine Rural Society (SRA), warned that Heller “wants to present it as a contribution from the richest, but we know what happens to all these unique treasures, they remain forever.”

The neoliberal coalition Juntos por el Cambio, led by former President Mauricio Macri, said it was a “confiscating” measure.