Argentina's Social Security threatened with Macri bill that would cost an extra $13 billion a year.
Last edited Tue Jun 7, 2016, 10:06 PM - Edit history (1)
A wide-ranging new bill introduced by President Mauricio Macri’s administration, which includes changes to pensions, a tax amnesty, and revenue-sharing deals with the provinces, could, based on the fine print, cost the ANSES social security agency up to $13 billion a year by the time it's fully implemented.
The bill, introduced by President Macri on May 27, is part of a broader bill that allows any Argentine national maintaining undeclared offshore accounts to repatriate said funds by paying a 10% tax and with immunity from prosecution.
A number of right-wing media outlets supportive of Macri seized on the fact it includes additional payments to high-income retirees to portray the legislation as a "pensioners' payment bill." These additional payments, projected to cost ANSES an extra 75 billion pesos ($5.3 billion) a year, will solely benefit pensioners who are already earning 10,000 pesos ($700) or more - about twice the basic 4,950-peso ($350) pension most retirees currently collect.
Administration officials touted this proposal as a way to settle long-standing litigation (some dating from 1994) filed by thousands of seniors with a high level of social security contributions; legal analysts, however, point out that nothing in the bill would impede some from suing for more later.
The bill also includes a reimbursement of the 15% deducted from the federal revenue sharing budget to help finance ANSES outlays. This reimbursement is partly the result of a Supreme Court ruling to that effect last year in a suit brought forward by three provinces. An agreement signed by President Macri and the nation's 23 governors this February stipulates that the 15% reimbursement will be phased in three percentage points at a time each year until 2020 - at a cost 21 billion pesos ($1.47 billion) in 2016 and $7.4 billion annually by 2020.
Together, these two changes will cost the ANSES social security agency, which already had a deficit of $6 billion in 2015 (out of $57 billion in outlays), an additional $12.7 billion a year by 2020.
Asked about the bill, ANSES director Emilio Basabilvaso was confident that the additional revenues needed for these changes would come from a 10% tax on repatriated offshore accounts and an eventual economic recovery (Argentina has been in a deep recession since Macri began enacting austerity policies shortly after taking office six months ago).
The only concrete source of new funding mentioned by Basabilvaso, however, was the planned sale of a still-unspecified share of ANSES’ equity holdings. The sale of these investments, part of the agency's $60 billion sustainability fund (FGS), had been lobbied for by a number of the Argentine corporations in which ANSES holds enough stock to be entitled to a seat on the board of directors.
This latter proposal is strenuously opposed by opposition lawmakers - particularly the center-left Front for Victory (FpV), whose leader, former President Cristina Fernández de Kirchner, nationalized the largely fraudulently-run and insolvent private pension funds in 2008. FpV legislators have compared Macri’s plans to sell long-term, profitable assets in order to finance ordinary spending, to the disastrous Menem-era privatizations of the 1990s.
At: http://buenosairesherald.com/article/215423/revenuesharing-pension-hikes-in-bill-could-cost-up-to-us$13b-a-year