Argentinian Government Slammed For Export Tax Hike

by Robert Lee, Tax-News.com, London

08 April 2002

The Argentinian Economy Ministry announced on Thursday that the government will be increasing the export tax rates on grains, oilseeds, vegetable oils, and vegetable meals to 20% in an attempt to bolster flagging revenue collection.

Currently, the export tax rate on grains and oilseeds is 10%, while the rate for vegoils and meals is 5%. The beleagured country is a major producer and exporter of grains, and farm goods make up around half of the $26 billion worth of annual exports. According to estimates, total exports account for around 10% of Argentina's gross domestic product.

The government has predicted that the move, which has been widely unpopular with both farmers and exporters, will bring in an additional $3.1 billion in revenues per year, part of which will be used to fund social programmes.

However investors and representatives of the country's agricultural sector have warned that an increase in export taxes is likely to harm growth in the only dynamic portion of the economy, and will almost certainly affect Argentina's competitiveness on an international level.

Speaking on Thursday, President of the Argentine Rural Society, Enrique Crotto, condemned the government policy as 'unproductive and anti-exporter', and warned of the possibility of protest.

'I don't rule out forceful action. I would say (such action) is almost inevitable,' he told the Reuters news service.

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