Argentina Raises Export Taxes to Fund New Government’s Spending
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.
Argentina, the world’s biggest seller of processed soybean meal and oil, raised export taxes on Saturday as the government seeks to fund spending under new President Alberto Fernandez.
After the peso’s 37% slump this year, his administration is replacing a levy of 4 pesos per dollar for many exports with a fixed charge of 9%, according to a decree in the official gazette.
But the document didn’t specify soybeans in a list of products, leading Eugenio Irazuegui, head of research at grains brokerage Enrique Zeni, to interpret that the oilseed, and grains such as corn and wheat, will revert back to a previous rate of 12%. Because soybeans and processed soy products already have an additional 18% charge, that would mean shipments of them are taxed a total of 30%.
Crop crushing and export group Ciara-Cec, whose members include the so-called ABCD giants of agricultural trading, confirmed in a phone message on Sunday that soy will be charged 30%, and corn and wheat 12%.
When former leader Cristina Fernandez de Kirchner, a foe to farmers and now Alberto Fernandez’s deputy, left the presidency in 2015, soy exports were taxed up to 35%, corn 20% and wheat 23%.
The government said the move -- nearly doubling the rate for corn and wheat, which have enjoyed a boom in recent years -- was urgent to meet its fiscal needs.
On Sunday, Fernandez told Radio Mitre that farmers shouldn’t be rattled by the hikes, explaining that he was simply getting rates closer to where they were a year ago, when the system of 4 pesos per dollar was brought in. The currency devaluation since then had diluted the tax.
The move had been widely telegraphed by growers, whose crops are worth a third of all the nation’s export dollars. The head of the Argentine Rural Society, Daniel Pelegrina, said in a radio interview the new taxes “will have a very big impact on farmers.”
Argentina is also enduring a severe drought on the Pampas arable belt.
|Crop Windfall Slips Away in Blow to Argentina’s New Leader|
|Argentina Has to Take Care W/Export Tax Hike, Min. Says: Ambito|
|Argentina to Back Farmers in Bid for Export Dollars: Fernandez|
|Argentine Soybean Planting Facing Setbacks From Drought|
©2019 Bloomberg L.P.