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The lower house of Argentina’s Congress has approved state reform and tax packages proposed by President Javier Milei, handing the libertarian leader a first legislative victory in his push for lasting reform.
Deputies voted 142 to 106 with five abstentions for their general approval of the state reform bill, which includes an incentive system for large investments, a relaxation of labor market rules and a green light for the permanent dissolution of some public institutions and the privatization of some state-owned companies . These measures were approved by a majority in an article-by-article vote.
At the heart of the tax law is a plan to reinstate the income tax on high earners after it was abolished last year and also includes a comprehensive tax amnesty. It was approved with 140 votes in favour, 103 against and six abstentions.
“This is a fundamental first step to get Argentina out of the mess it has been in for the last few decades,” Milei said on X after the vote on the reform bill.
Milei, who took office in December and whose party controls less than 15 percent of seats in the lower house, has struggled to reach agreement with the opposition. Instead, he has relied solely on executive power to impose the austerity measures and deregulation that he says are needed to resolve Argentina’s severe economic crisis.
Analysts said the lower house vote was important in proving that the political outsider – who has repeatedly clashed with lawmakers and Argentina’s powerful provincial governors – can strike deals with moderate opposition parties.
“It’s a good sign that Milei has shown a certain level of pragmatism, because as a minority government it is very difficult to function without pragmatism,” said Lucas Romero, director of consultancy Synopsis.
He warned that the bills would still face a closely contested vote in the Senate, where Milei’s La Libertad Avanza bloc controls just 10 percent of seats. Analysts said the Libertarians may need to win over some members of the hardline Peronist opposition bloc Unión por la Patria to hold on in the Senate.
“His challenges to governing ability have not gone away,” Romero added.
According to local investment bank BancTrust, the tax measures would improve the federal government’s fiscal balance by about 0.9 percent of gross domestic product and boost market confidence. They would also restore lost revenue to the provinces, a pressing concern for governors.
“The legislative package is critically important,” said Ramiro Blazquez Giomi, head of research and strategy at BancTrust. “Both with a view to achieving the government’s balanced budget target, but also to keep society engaged with Milei by enabling capital inflows that can stimulate growth.”
In February, Milei abruptly withdrew a more far-reaching version of the reform bill from the plenary session of Congress after crucial articles were rejected, calling opposition lawmakers “traitors.”
This time, Milei gave his negotiators more room to compromise and eliminated many of the most controversial articles, such as parts of labor reform, opposed by Argentina’s powerful union movement.
Analysts said the legislation, previously called an “omnibus bill,” has become a “minibus bill.”
Milei said that if the two bills become law, he would invite supportive governors to come together on May 25, a national holiday, and sign a “pact” to build consensus for broader economic and government reform.