August 25, 2009

Argentina's president plans to veto a bill granting export tax relief to those farmers hit hardest by last season's drought, Cabinet Chief Anibal Fernandez said Monday (August 24).

On Thursday, Congress approved the emergency farm bill, providing at least 500 million pesos (US$130 million) in drought relief funds. The bill provides tax benefits and suspends export taxes for farmers from districts declared "disaster zones" and cuts the export taxes in half for farmers from "emergency zones."

A severe drought battered Argentine crops last season, causing nationwide grain production to fall by over a third.

However, in a twist, legislators allied with the government's Front for Victory coalition now say the granting of export tax relief was a mistake.

The Cabinet Chief said that the president would reject the law due to the impossibility of preventing fraud and the fact that most farmers had already sold their crops.

Opposition lawmakers were quick to criticize those who voted for the bill, but now want it to be vetoed.

"Maybe some didn't read or really understand the law, but they voted for it," opposition Union Pro party Representative Francisco de Narvaez told local news channel TN.

Export taxes have been a constant source of friction between the government and farmers over the past two years. Farmers launched a series of crippling strikes over four months last year to protest against higher taxes, which were latter rolled back by the Senate.

Farmers have continued to push for lower export taxes, which run as high as 35 percent on soy.

However the government has refused to budge as it continues to lay out heavy stimulus spending and revenue falls due to a cooling economy.