- The Washington Times - Thursday, March 19, 2009

BUENOS AIRES, ARGENTINA (AP) - Argentina will funnel 30 percent of tax income levied on soy exports into an emergency fund destined for the nation’s 23 provinces, President Cristina Fernandez announced Thursday.

Her decree requires provinces to use the expected $1.8 billion in yearly tax income to build hospitals, schools, water systems and other infrastructure projects, easing the impact of the world economic crisis, Fernandez told a televised news conference.

The move boosts federal outlays to provinces by 11 percent a year _ something opponents dismissed as proof that Fernandez is using the fund to buy support ahead of national elections later this year.

The federal government manages tax income on farm exports and will continue to receive a 70 percent cut on soy. Levies on soy exports are among the highest, at 35 percent.

Tens of thousands of farmers have demanded that rate be reduced for more than a year, saying it makes their soy less competitive abroad at the very moment that the global economic crisis slashes demand for Argentine soy, wheat, corn and beef exports. Argentina is among the world’s top producers of those commodities.

Fernandez was forced to reverse one export tax hike last July, after a four-month strike by farmers and truckers crippled the commodity-dependent economy.

Opposition lawmakers sought to introduce a new tax cut measure on Thursday, but members of Fernandez’s Peronist party skipped the debate, precluding the needed quorum.

Hundreds of farmers gathered in protest on roadsides across Argentina, dismissing the new soy export tax fund as a bid to buy support ahead of national elections.

“They’re putting soy money directly into the campaign,” Argentine Agrarian Federation head Eduardo Buzzi told local television.

The Senate appears set to next week approve Fernandez’s bid to move elections to June 28 from Oct. 25, a move she says is needed to free her up to focus on the economic crisis.

Critics say she wants the vote held before her popularity further weakens.

A February survey by the Buenos Aires-based polling firm Poliarquia showed 27 percent of respondents backed her, compared with 50 percent when she took office in December 2007. The poll had an error margin of 3 percentage points.

Interior Minister Florencio Randazzo said the new soy fund proves the government wants to boost aid programs, rather than collect high export taxes for its own purposes as opponents have claimed.

“It’s not about the coffers,” Randazzo said, defending the current export tax regime. “It’s about increasing and sustaining economic activity and employment.”

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