Argentina raises agricultural export taxes

[sandensea]

Argentine President Alberto Fernández approved a series of export tax increases today, continuing a policy adopted last year by his conservative predecessor, Mauricio Macri, in response to a mounting debt crisis.

The measure, as outlined in the decree, was based on "the serious situation that public finances are going through," such that "it is necessary to adopt urgent fiscal measures that allow, at least partially, to meet budget outlays with genuine resources."

The export tax hikes are expected to raise up to $2 billion in 2020 - a fraction of the projected $18 billion budget deficit this year, or 4% of GDP.

Export withholding rates thus rose from 5% to 9% for meats, seafood and flour, among others; 6.7% to 12% for grains (mainly corn and wheat); and from 24.7% to 30% for soy.

Exports such as fruit, artisanal and industrial products - the hardest hit by the country's 20 month-old recession - will see no tax increase, and will instead be taxed at the lowest bracket: 3 pesos per dollar, or 4.7% currently.

The measure follows a similar tax hike decreed by former President Macri on September 3, 2018, which raised withholding rates from 0% to 10.8% for grains and from 23% to 28.8% for soy (1.2% below the new rates) - but which had been gradually reduced to 6.7% and 24.7% currently.

Trade surplus and interest outlays

Reaction from farm lobbies was varied, with the head of the powerful Argentine Rural Society, Daniel Pelegrina, lamenting that "when (Fernández) was a candidate he told us we'd be consulted and this did not happen; (Agriculture Minister Luis) Basterra met with us on Thursday and said nothing."

Representatives from the Argentine Beef Promotion Institute (IPCVA) indicated, however, that they "have no problem" with a withholding rate of up to 15% - provided that no restrictions are applied to its rapidly growing Chinese market.

Argentine beef exports were among the few bright spots amid the worst recession in two decades: beef exports during first 10 months of 2019 rose 52% from a year earlier to $2.4 billion (4.5% of the total) - 64% of which was bought by China.

Amid a 25% collapse in imports, the nation's trade surplus is projected to reach $15 billion this year - a surplus dwarfed by nearly $20 billion in foreign debt interest outlays.

At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fwww.cronista.com%2Feconomiapolitica%2FRetenciones-un-cambio-que-garantiza-a-Alberto-unos-us-2000-millones-extra-20191214-0007.html

Argentine Economy Minister Martín Guzmán, who oversees international accounts, including trade and foreign debt; President Alberto Fernández; and Production Minister Matías Kulfas, who oversees domestic economic policy.

Today's measure seeks add $2 billion in revenue; but raises agricultural export taxes to just 1.2% over September 2018 levels.

The country's foreign debt crisis demands 15% of its federal budget - and more than its entire, $15 billion trade surplus this year.

[Judi Lynn]

1. Best wishes to President Alberto Fernndez, as he and his administration struggle with the bomb

dropped when Macri cheated his way into the Presidency.

Hope the people affected by his measures will be decent enough to give him the time needed to get the work done, and hold back their attacks they launched at the past progressive President who did such a far, FAR better job.

Macri seemed scared to death that Cristina is still beloved by so many.

He certainly wasn't, isn't, and will never be.

Thanks for the information, sandensea.