Argentina's government-farmer stand-off heats up as Congress approves new tax

The stand-off between the Argentine government and the country's farmers, which had been in a temporary lull after the latter called off a three-month protesting a new tax regime, seems all set to reignite with the lower house of the legislature approving the measure on Saturday. (See: Argentine farmers' ease 3-month strike as protesters agree to meet President)

Argetina is among the world's biggest food producers - it  is the world's third-largest exporter of soy and wheat and the second-biggest exporter of corn.

Argentine President Cristina Fernandez, wife of former President of Argentina Néstor Kirchner and the first wife in history to be elected to succeed her husband as a president, had implemented a more than 10-per cent increase in the taxes on 11 March, sparking months of on-and-off protests by major farm groups who blocked highways and caused nationwide food shortages.

Even government supporters protested, urging Fernandez to negotiate an end to the crisis, that has led to her popularity plummeting.

The 103-day farmers' strike was called off on 22 June after the president invited the demonstrators for talks and promised to place the new tax measures in front of the nation's Congress. However, detractors derided the move as a sham, as the president's political party, the Peronists, hold a majority.

Therefore, Saturday's 129-122 vote may come as somewhat as an embarrassment for the beleaguered president, even though it crossed the majority mark of 125. Some members of her party, especially from rural areas, and her allied Front for Victory party openly opposed the tax increases, revealing fissures in a traditionally solid political front.

To build support for the bill, the government says it has expanded tax exemptions and rebates for small- and medium-sized agricultural producers. But farmers say the tax rates are still too high and demand the sliding-scale system be suspended.

Farm leaders "reject what the ruling party has presented," said Eduardo Buzzi, president of the Argentine Agrarian Federation. "It leaves farmers in the same situation they've been in for the last 120 days."

The bill is scheduled to be taken up for debate by the upper legislative house, the Senate, in the ext few days.

"We're still playing in the first half,'' Buzzi said, ''In the second half, we're going to play in the senate and we'll go to the courts, even to the supreme court,'' to stop the new taxes.

Fernandez has refused to roll back the taxes, saying they are needed to share soaring farm profits with Argentina's 10 million poor. Farmers contend the higher taxes make it hard for them to make a living and that they need to reinvest profits to increase production to meet rising demand.

In the October 2007 general election, Fernández, who ran for the presidency of Argentina, representing the ruling Front for Victory party, won a 45.29 per cent of the vote, beating her nearest rival a 22% lead over her nearest rival. This was one of the widest margins obtained by a candidate since democracy returned in 1983.