The bill proposes a monthly update of family allowances and benefits such as Alimentar and those for minors who are victims of violence on the basis of the CPI, which up to now have been adjusted using the pension benefit adjustment formula.

The proposal would imply an expenditure equivalent to 1.23% of GDP, above the expenditure that would result from the extension of Law 27,609 or the application of DNU 274/24.

The adjustments are calculated with the proposed mechanism as from May and the CPI would always be that of the previous two months.

• At the end of 2024, the recipients of benefits for children and adolescents would receive higher amounts if Law 27,609 were extended, with the exception of the Alimentar Benefit, the amount of which is defined by the Executive Branch.
• With the formula provided for in the bill, family allowances and the programs under the Brisa Law would lag behind the increases they would have with the extension of Law 27,609 or the application of DNU274/24 until the end of the year.
• Universal allowances (Universal Child Allowance – AUH -, and Universal Pregnancy Allowance – AUE -) would have an improvement in purchasing power due to the increase in their amount provided in January, but to a lesser extent than with the extension of Law 27,609 or DNU274/24.
• The Alimentar benefit would improve with respect to inflation (contrary to the assumption of keeping it fixed).

As all formulas include adjustments based on the inflation of previous periods, a scenario of price deceleration would contribute to an increase in real terms. But other variables such as salaries and ANSES revenues may have a different impact.

This report analyzes the fiscal impact of four bills proposing amendments for the pension benefit adjustment formula currently in force, based on the reports of the Committee on Social Security of the Chamber of Deputies.

For the purpose of estimating the fiscal impact of each Committee Report, a comparison is made between the pension benefit adjustment formula being proposed in each bill and the adjustment formula in force, approved by Decree of Necessity and Urgency (DNU) 274/24. Likewise, a comparison is made with the formula in force up to March of the current year, established by Law 27,609.

The analysis is based on the macroeconomic assumptions made by the Ministry of Economy for the fiscal year, considering that the new regulation would be applied as from May. The formula under Law 27,609, was applied from January to March, and the one provided for by DNU 274/24 was applied in April.

The fiscal impact of the proposed tax amendments included in the Bill on Palliative and Relevant Tax Measures was estimated on the basis of the theoretical tax determined for the year 2024 and based on a macroeconomic scenario based on the most recent projections of the Ministry of Economy available to the OPC.

• Due to the impossibility of anticipating taxpayers’ decisions, the fiscal impact of the Exceptional Regularization Regime for Tax, Customs and Social Security Obligations and the Asset Regularization Regime could not be estimated.
• The reform of the Wealth Tax would reduce the burden of this tax in a range of 0.29% to 0.61% of GDP, depending on the fiscal year and the assumptions considered.
• The abolition of the Real Estate Transfer Tax would have a theoretical estimated impact of 0.0161% the GDP for the 2024 fiscal year and 0.125% the GDP assuming an eight-month impact during 2024.
• The income tax reform would increase revenues from this tax by 0.5004% of GDP based on the full fiscal year 2024. The increase would be 0.3004% assuming an application of seven months during 2024.
• The reform of the Simplified Regime would have a positive impact on the collection of the Monotributo (Simplified Regime for Small Taxpayers) (+0.0888%), Social Security System (+0.0351%) and the Social Security Healthcare System (+0.0967%), and a negative impact on the Income Tax (-0.1474%).