① In his speech on the first anniversary of his administration, Argentine President Millet announced the cancellation of 90% of current national taxes; ② Millet promised to allow local authorities to independently manage taxes and restore the financial autonomy of local governments to promote commercial activities; ③ He also plans to abolish currency controls in 2025, so that everyone can trade and charge in dollars or any other currency other than the tax payment system.
Financial Services Association, December 13 (Editor Zhou Ziyi) -- Argentine President Javier Milei (Javier Milei) delivered a televised speech on the first anniversary of his inauguration, announcing a package of political, fiscal, and economic policies, including the abolition of 90% of current national taxes, and plans to lift monetary controls in 2025.
Millet's speech marks a complete shift in the country's policy trends over the past few decades. The move is aimed at attracting foreign investors who have long shied away from the Argentine market.
Eliminate 90% of taxes
One of the “highlights” of Millet's speech is that Argentina will promote a drastic tax reduction policy next year. Millay announced that 90% of the national tax will be abolished, with the aim of promoting commercial activities and reducing the underground economy developing under heavy taxes.
In addition to this, Millet also promised to allow local authorities to independently manage tax revenue and restore the financial autonomy of local governments. He said that next year he will see real tax competition among provinces to see who can bring in more investment.
Millet's package of reforms also includes abolishing currency controls in 2025, that is, transactions in dollars will be allowed to be used in all operations that previously only allowed transactions in Argentine pesos, and emphasized that from 2025, currency control “will end forever.”
According to reports, the current monetary regulations have been implemented since 2019, and it is stipulated that Argentines can legally buy 200 US dollars a month at banks. Millet said, “(Removing currency controls) means every Argentinian can buy and sell in dollars or any other currency, but taxes will still be paid in pesos.”
In terms of international trade, Millet's team has secured new investment commitments of $11.8 billion in mining, energy and infrastructure. These commitments show growing confidence in the direction of Argentina's economy, although the challenges remain significant.
Additionally, Millet is also seeking to negotiate a free trade agreement with the incoming Trump administration. The move could open up new markets for Argentine exports and bring in more foreign investment.
Obstacles to the way forward
However, Millay's path to reform faced serious obstacles. During the year in which Millay was in office, his administration cut public spending by nearly one-third and removed controls and subsidies on public transportation, heating, and video prices, leaving more people facing economic difficulties and driving 57% of Argentines into poverty.
Millay's approach is widely known as “shock therapy,” and Millet believes that by removing the barriers that hinder the Argentine economy, short-term pain will bring about sustainable growth.
This is also true. Over the past year, the government's austerity measures have reflected positive aspects, such as lower inflation and relatively stable prices in recent months.
According to a recent poll, about 56% of Argentines have a positive attitude towards President Millay. Although his statements during the election campaign were aggressive, after he came to power, his policies were clearly much more rational and more pragmatic.
Following Miller's latest national address, Argentina's Minister for National Transformation Federico Sturzenegger said, “To reduce the tax burden by 90%, we must cut our expenses by 90%. We've now cut 30%, which is historic.”
