Argentina

Argentine senate rejects tax hike on grain exports

Article published on the 2008-07-17 Latest update 2008-07-17 13:09 TU

Rural farmers cheer after the vote
(Credit: Reuters)

After four months of wrangling and farmer protests, the Argentine Senate narrowly rejected a proposed tax hike on grain exports Thursday, a major defeat for President Cristina Kirchner. The vote, broadcast live on national television, was cheered by hundreds of thousands of farmers and supporters who gathered on the streets of Buenos Aires.

Kirchner had proposed to raise the tax on grain exports to redistribute farming's growing wealth from high food prices. Grain export tariffs would be raised from 35 to 47 per cent on a sliding scale that reflects global prices.

It called for lower tariffs for small farmers, including a 30 per cent tariff for up to 300 tons of grain exports. Farmers producing 750 tonnes of exportable goods would have a 35 per cent tariff levied on them.

Officials said that these measures would benefit around 90 per cent of Argentine farmers.

But farmers protested this measure, arguing that this would greatly disrupt the agricultural sector.

Argentina is currently the third-largest soybean exporter worldwide, earning 15 billion euros a year. It is the second-largest corn exporter and the fifth-largest wheat exporter.

Farmers had set up roadblocks to protest Kirchner's plan, causing countrywide food shortages, but suspended their strike in early June in the hope that it would be defeated in Congress.

It was Vice-President Julio Cobos who cast the deciding vote against the bill to break a 36-36 tie in the Senate, outraging members of his own party, the Justicialist Party. The party, which is also Kirchner's, controls both houses of Congress.