Argentina to cut income taxes to spur spending

BUENOS AIRES Dec 12 (Reuters) - Argentina's government will send a bill to Congress next week to rejig the income tax formula, lowering rates for higher-paid workers to spur spending amid an economic slowdown, officials said on Friday.

This is the latest in a series of measures unveiled by center-left President Cristina Fernandez to try to ease the impact of a global slump on Argentina's economy and its workers.

Fernandez has proposed low-cost loans to spur consumer spending and tourism, while also launching a massive public works program and a plan to pardon tax evaders who commit to keeping workers on the payroll and investing in the economy.

The president referred to the "Machinea table," a formula created by former Economy Minister Jose Machinea, which has caused distortions for some workers whose take-home pay shrank when they got salary increases, due to heftier taxes.

"The Machinea table ... was nothing more than a regressive and mistaken measure," Fernandez said in a televised speech.

The table had not been revised despite high inflation in the last four years, and the country's main trade union group, known as the CGT, had long called for its elimination.

Scrapping the formula will translate into "an increase for workers with a certain purchasing power, which will spur consumer spending," Fernandez said.

Argentina's economy grew by at least 8.5 percent a year from 2003 through 2007, but recent indicators forecast a sharp slowdown in growth starting this quarter. (Reporting by Jorge Otaola; Writing by Hilary Burke; Editing by Fiona Ortiz and James Dalgleish)