Peronist governors and allied political forces will meet next Wednesday in Buenos Aires amid a dispute with the central government over a clause in the labor reform bill. This reform seeks to establish a reduction in the Income Tax, which would lead to a decrease in the resources of the provinces. Although the meeting is still being arranged, so far it would only include leaders of the Justicialist Party (PJ) and other allied opposition sectors, according to a source from one of the peronist governorates. The venue has also not yet been decided. The provincial opposition leaders want to define common positions ahead of the labor reform debate, a bill that the ruling coalition seeks to pass in the Senate on February 11. Beyond the discussions between sectors about changes to the labor regime, peronist representatives could even gain the support of governors close to La Libertad Avanza on the tax issue: the Casa Rosada proposed reducing the corporate Income Tax rates from 35% to 31.5% and cutting employer contributions. The provinces claim the impact will be over 3 trillion for their coffers, while Economy Minister Luis Caputo clarified that this fiscal shortfall will only occur in 2027 and will be around 1.5 trillion pesos. Worse yet, 2027 will be an election year, and no governor wants to be short of funds to face their campaigns. Deja vu The government does not want to concede on this point, and the situation recalls when the governors managed to defeat the famous Chapter XI of the 2026 Budget at the end of last year. It was in December, when political leaders from different backgrounds agreed and ordered their legislators to reject the article in the spending plan that sought to repeal the emergency laws on Disability and university funding, which had even been vetoed by President Javier Milei and ratified by Congress. Earlier, in September, the leaders had managed to push forward the automatic distribution of ATN (funds) project after a meeting at the Federal Investment Council, which was approved by Congress but also vetoed by Milei. If the government persists in this intransigence, the ruling coalition faces the same shadow: the governors dealing another legislative defeat to an administration that is on the rise.
