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Argentina's Senate rejects tax hike on grain exports
2008-07-17
BUENOS AIRES (AFP) - Argentina's Senate on Thursday narrowly rejected a proposed tax hike on grain exports in a major defeat for President Cristina Kirchner after months of protests by farmers opposed to the increase. The dramatic session had Vice President Julio Cobos cast the deciding vote against the government-backed bill to break a 36-36 tie in the Senate, sparking outrage among the president's allies. Kirchner had sent the proposal to Congress after months of strike action by farmers following her initial decree raising taxes on soy and grain exports issued in March. The bill passed the lower Chamber of Deputies on July 5 where it faced stronger than expected opposition. It proposed to raise grain export tariffs from 35 to 47 percent, on a sliding scale linked to global prices. The vote came after rival protests for and against the bill on Tuesday, with hundreds of thousands demonstrating in the streets. With the vote carried live on national television, hundreds of opponents of the bill gathered in the Palermo district to watch the proceedings. They erupted in celebration when the bill went down to defeat. The bill was rejected even though Kirchner's ruling Justicialista Party (JP/Peronists) controls both houses of Congress. Kirchner had decided to raise the tax on grain exports to redistribute the farming sector's growing wealth from spiraling commodities prices. Farmers condemned the measure, arguing it would devastate one of the country's most profitable businesses. Argentina is one of the biggest food producers in the world, leading with exports of soybean oil and products at 24 billion dollars a year. It is also the second-biggest corn exporter, after the United States, and the fifth-biggest wheat exporter. The farmers' strikes dealt a heavy blow to the country's economy and deeply dented Kirchner's popularity. Roadblocks by farmers and truck drivers have caused food shortages around the country. Farmers suspended their strike in early June and had threatened to revive the action depending on the vote in Congress. The government bill had called for lower tariffs for small producers -- 30 percent tariff for up to 300 tons of grain exports per year, and 35 percent for up to 750 tonnes, which would benefit 85-90 percent of Argentine farmers, officials said. It also proposed setting up a special fund to reinvest some of the tariff revenues in public work projects such as building new hospitals, schools and roads.
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