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The lower house of Argentina’s congress has approved state reform and tax packages proposed by President Javier Milei, delivering a first legislative victory to the libertarian leader in his efforts to enact lasting reform.
Lawmakers voted 142 to 106, with five abstentions, to give their overall approval to the state reform bill, which includes an incentive scheme for big investments, a relaxation of labour market rules and a green light to eventually eliminate some public agencies and privatise some state-owned companies. Those measures were approved by a majority in an article-by-article vote.
The tax bill centres on a plan to reinstate income tax for high earners after it was eliminated last year, and also includes a sweeping tax amnesty. It was approved by 140 votes to 103, with six abstentions.
“This is a fundamental first step to get Argentina out of the mess that it has been in over the last few decades,” Milei said on X after the reform bill vote.
Milei, who took office in December and whose party controls less than 15 per cent of lower house seats, has struggled to reach deals with the opposition. Instead, he has relied solely on executive power to enact the austerity and deregulation he says are needed to solve Argentina’s severe economic crisis.
Analysts said the lower house vote was important to proving the political outsider — who has repeatedly clashed with legislators and Argentina’s powerful provincial governors — can build agreements with moderate opposition parties.
“It is a good sign that Milei has shown some level of pragmatism, because as a minority government, it’s very difficult to function without pragmatism,” said Lucas Romero, director of Synopsis consultancy.
He cautioned that the bills would still face a closely fought vote in the senate, where Milei’s La Libertad Avanza bloc controls just 10 per cent of seats. Analysts said the libertarians might have to win over some members of the hardline opposition Peronist bloc, Unión por la Patria, to pass the senate.
“His governability challenges have not gone away,” Romero added.
The tax measures would improve the federal government’s fiscal accounts by about 0.9 per cent of gross domestic product, per local investment bank BancTrust, boosting market confidence. They would also restore lost income to the provinces, a pressing concern for governors.
“The legislative package is critical,” said Ramiro Blazquez Giomi, BancTrust’s head of research and strategy. “Both from the point of view of achieving the government’s balanced budget goal, and also to keep society engaged with Milei by allowing for capital inflows that can jump-start growth.”
In February Milei abruptly withdrew a more sweeping version of the reform bill from the floor of congress after crucial articles were voted down, calling opposition lawmakers “traitors”.
This time Milei gave his negotiators more leeway to reach compromises, scrapping many of the most controversial articles, such as sections of the labour reform opposed by Argentina’s powerful union movement.
Analysts said the legislation, previously dubbed the “omnibus bill”, had become a “minibus bill”.
Milei has said that if the two bills become law, he would invite supportive governors to come together to sign a “pact” on May 25, a national holiday, in an effort to commit to finding consensus for wider economic and state reform.
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