Argentina senate rejects confiscatory farm export tax

NY Times:

In a crushing defeat for Argentina’s beleaguered president, the Senate rejected Thursday increases in the agricultural export tax that have caused a farmer rebellion, with the vice president siding with farmers and casting the deciding vote.

After nearly 18 hours of debate, the Senate voted, 37 to 36, against the system of floating-rate taxes, which the government of Cristina Fernández de Kirchner imposed in March without consulting the Congress. Earlier this month, the lower House narrowly approved the system, 129 to 122, after 19 hours of debate.

“I do not believe that a law works that does not offer a solution to this conflict,” said a weary Julio Cobos, the vice president, moments before voting against the measure. “History will judge me, I don’t know how.”

Farm supporters, thousands of whom watched the marathon debate on a giant television screen in the trendy Buenos Aires neighborhood of Palermo, reacted at 4:30 a.m. as if Argentina had won the soccer World Cup, chanting “Argentina! Argentina!”

Mario Llambias, the head of the Argentine Rural Confederation, said in televised comments that Mr. Cobos “conducted himself like a patriot.”

The new tax system raised taxes on soybeans from a fixed rate of 35 percent to a rate that has floated up with global prices to more than 44 percent. Amid rising costs for materials like fertilizer, it reduced farm profits and provoked a series of crippling strikes throughout the country, shutting down highways for grain trucks bound for exports and causing scattered food shortages.

The rejection of a measure she fought so hard to defend was a severe political blow to Mrs. Kirchner, who took office in December after her husband and predecessor, Nestor Kirchner, decided not to run for re-election. Facing plummeting approval ratings that have fallen as low as 20 percent support in some polls, Mrs. Kirchner took the calculated risk last month of sending the measure to Congress for debate. Supporters of Mrs. Kirchner’s Peronist bloc control both houses of Congress.

Mrs. Kirchner and her husband, who leads the Peronist bloc, have justified the higher taxes as important to redistribute the country’s wealth and hold down Argentine food prices. But they exacerbated tensions in the country by portraying the farmers’ strikes as a political threat, calling the strikers “greedy” and “coup plotters.”

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This is not just a victory for farmers. It is a victory for freedom and for providing food at more reasonable prices. At a time when food prices are already increasing Kirshner's policies made no sense in any context than her own government greed.

Hopefully this will help throw off the Hugo Chavez corruption that has infested Argentina of late. Kirshner's election was tainted by the discovery of a Chavez bag man with $800,000 trying to bring money into the country. Someone of those responsible for the "contribution" are on trial in Miami.

This should be good news for Argentina.