June 10, 2008

Funds from Argentina's soy tax to benefit citizenry 

Argentine President Cristina Fernandez announced plans Monday (June 9, 2008) to set up a fund that diverts the government's intake from a bitterly contested increase in soy export taxes into health, housing and road projects around the country.

Conceding she had made an "error of political ingenuity" in not explaining the redistributive benefits of the recent shift to a sliding-scale soy export tax at the heart of her three-month conflict with farmers, Fernandez said that 60 percent of the fund would be dedicated to building 30 new hospitals.

The remainder would go toward new housing for the poor and road projects, she said.

According to a copy of the decree distributed after the president's speech, the fund, which will run through 2008 and 2009, will comprise all net tax intakes in excess of 35 percent of soy exports - the fixed rate at which the tax was imposed before the new regime was introduced March 11. In other words, the fund will absorb any excess revenue raised as a result of the de facto tax rate increase that came into effect with the introduction of the new sliding-scale system, which varies according to international prices.

The projects paid for by the fund will be administered by provincial and municipal governments, Fernandez said.

Attacking farm group leaders who have staged strikes and roadblocks over the past months, Fernandez said grains exporters have "put little capital at risk and employed few labourers to transform itself into one of the most profitable sectors.

"To truly address the problem of poverty without addressing the distribution of income or such extraordinary profits is impossible," the president said.

Farmers suspended their latest strike Monday, but the truce appears to be wobbling, with many regional farm groups maintaining roadblocks to prevent the transport of grain and livestock.