The fiscal cost of the project fell by half due to the changes that the Government negotiated with the provinces

They are the two main modifications that the national government agreed to with the provincial leaders in exchange for having the votes in the upper house. The governors pushed, from the beginning of the debate on the labor reform, that the reduction in corporate profits be compensated in another way.

The impact on the coffers would have been high because a lower collection of Profits would have resulted in a lower co-participation distribution. The officialdom ended up directly eliminating article 190°which reduced the maximum rate for companies from 35% to 31.5%.

According to a calculation made by the Argentine Institute of Fiscal Analysis (Iaraf), only that article of the labor reform implied 0.22% of GDP fiscal cost. In this case it was not only towards the national accounts but also towards the provinces. That number became zero after the half-sanction of the Senate.

The other relevant change in the negotiated version of the law was the “segmentation” of the Work Assistance Fund (FAL). This is the “financing” mechanism for layoffs or labor trials that will be mandatory for companies, through a specific fund that must be invested in the capital market.

The fiscal cost of this measure was that the contribution to the FAL had to be made by the companies, in replacement of a portion of employer contributions to the social security system. That is, instead of directing that mass of money to Anses, Each company must establish an account in a stockbroking company enabled and invest it in different financial instruments.

In practice, then, They were funds that Anses will stop receiving, which implies a fiscal cost. In the Senate committee’s opinion, the project indicated that the contribution to the FAL should be 3% of the pension contributions. But during the session the ruling party introduced two changes: it set a specific date for the start of the scheme and also “segmented” the contribution percentages.

For large companies it was stipulated at 1%, while for SMEs it was left at 2.5%. In this way, the cost to the treasury would end up being lower. According to estimates by the consulting firm Invecq, went from involving 0.5% of GDP to 0.2%less than half.

According to Iaraf, the original cost was 0.57% of the Gross Product and after the changes, would become 0.37%. The national government reserved the power according to the article established by the FAL that the rates of 1% and 2.5% could be raised to 1.5% and 3%, respectively. In that case, Iaraf continued, the cost for national public accounts would be 0.46% of GDP.

These are very relevant numbers when taking into consideration how “fine” the margin of fiscal adjustment that the Treasury Palace has to make this year could be to sustain the surplus. 2025 ended with a fiscal surplus of 1.4% of GDP, above the goal set with the IMF but below what the economic team had proposed as its own objective, which was 1.6%. In 2026 it should be able to achieve another 1.5% of GDP.

The year began with a marked drop in tax collection. With lower revenues, the Government may need to make additional adjustments to spending. As explained ClarionIn the first month of the year, the Treasury already made a first round of cuts. In January it would have been 4.2%, which is understood to be a drop in public works and transfers of funds to governors.

“Considering the Government’s refusal to raise taxes and with an activity that is difficult to take off, this gap generated by lower income and more spending will demand a new wave of adjustments in 2026“, considered LCG in a report.