Argentina applies tax hike on bio-diesel exports and lowers price for local market
Argentina tightened its grip on the country's energy sector on Friday by ordering a tax hike on bio-diesel exports, a move it said was needed to make domestic fuel prices more affordable, but denied market rumours that it will increase a soybean export tax.
Argentina is the world's biggest exporter of bio-diesel, a fuel made from soybean oil. The tax which will go to 32% from 20% becomes effective Saturday, according to a government decree.
The European Union is by far the biggest market for Argentina, which shipped a total of almost 900,000 tons of Bio-diesel in the first half of 2012, generated some 1.03 billion dollars, according to industry data.
Government economist Axel Kicillof, who burst onto the national stage when he became the public face of Argentina's nationalization of energy company YPF in April, justified the tax hike by saying that Argentines are paying more for bio-diesel than are foreign buyers.
“This will reduce the domestic price of bio-diesel,” he told reporters.
Also on Friday the government issued a decree lowering the official price of domestic bio-diesel by 15% to 4.405 Pesos (96 US cents) per ton from 5.195.8 Pesos.
Argentine bio-diesel production in 2011 was 2.4 million tons, of which 1.7 million was exported for about 2.1bn. The country plans to reach 4.5 million tons of annual production by 2013.
Argentine bio-fuels refiners had hoped President Cristina Fernandez would soon raise the compulsory blend requirement for diesel sold domestically to 10% from the current 7% as a way to boost local demand.
But Kicillof dashed that idea during his comments to reporters. He also dismissed rumors that the government was mulling an increase of export taxes on soybeans, which is currently set at 35%.
“This is a better measure than ones that would increase soy export taxes. This is a better way to go,” said Kicillof
Due to the lower than expected soybean crop caused by a drought that hit the fields during the growing season and has left the crushing companies with idle capacity, the government on Friday also lifted a ban on soybean imports, which will now be available to help keep Argentine crushing plants busy.
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Subsidise domestic prices, hike export prices.
So the international markets will look for other cheaper options, meaning that Argentina's profits will plummet, and CFK will have destroyed yet another Argentine industry for the sake of a short term 'populist' measure.
Countries like Canada, Costa Rica, Australia, Uruguay and India could benefit hugely from this. All they have to do is undercut the Argentine prices by a few cents and they will push Argentina out of the market.
Tax hikes aren't good on your exports, especially when there are at least 20 other countries in the world that produce bio-fuels.
So PH if the international consumer looks to a country (for instance Canada, they are top producers of biofuels) that will sell them bio-fuels cheaper than Argentina what money will Argentina make?
No customers means no revenue from the taxes, means no money for the Argentine economy.
You don't need a degree in economics to be able to work that out. And at the same time CFK won't allow the bio-fuel companies to make a profit domestically, so basically she will have ruined another Argentine company, or companies.
And once you've priced yourself out of the market, it will be so much harder to break back into it, especially as many countries don't see Argentina as stable, politically, economically or financially.
I'm sure the people will cheer her in the short term, but in the long term she is destroying Argentina's economy for years if not decades to come.
So you want the majority of Argentines to starve do you? I mean you don't want to feed the white man (I trust that feeding white women is acceptable to you), but the largest ethnic group in Argentina is the 'white man'. Besides why should you care about Argentine people or taxes etc...? I mean, you ran away from Argentina for a better life, but you want the people who live there to suffer. What an evil souled person you are. Racist and wanting people to starve, while you live in relative luxury.
@9 - BK. you know nothing about economics.
Let's get to the point. Let's say Argentina sells a barrell of bio-fuel for US$50, and then the Argentine government add on another US$10 in export tax.
Canada, on the other hand, sells a barrell of bio-fuel for US$50, but only adds on US$2 in export tax.
Now as the consumer what would you pay? US$60 or US$52 per barrell?
It's simple economics. Now if Argentina was the only country in the world that produced bio-fuels you could get away with increasing the tax, but you're not.
At least 20 other countries around the world also produce bio-fuels.
China
USA
UK
Canada
Australia
Puerto Rico
India
Pakistan
Brazil
France
Finland
Uruguay
Thailand
Czech Republic
Belgium
Israel
Lithuania
Indonesia
Estonia
Germany
Spain
Singapore
Taiwan
Norway
Papua New Guinea
Malaysia
Cambodia
Now all of these countries would love the opportunity to expand their export market and all they would have to do is undercut Argentina's price by a few dollars or even cents.
No country is going to spend more than it needs to, to buy fuel, so Argentina may find its international customers fading away.
And if no one is buying your fuel, there will be no taxes to collect and there is a danger of your bio-fuel industry collapsing, especially as CFK is making them cap the prices of fuel for domestic consumption. No tax means no money in the coffers, which means that the Argentine people will suffer.
Yes CFKs economic model in action. Disastrous.
Sounds racist, and you enjoy the benefits of our Canadian (white and British) society while you rant against us with your hate on the Internet.
You two-faced coward! I bet you don't say these things out loud to your hosts.
As a guest, you've abused Canada's hospitality and generosity.
If you have become a citizen, what does that say about your faith in your country and your culture???
You've escaped that corrupt dictatorship to get the lifestyle you want, but you deny fellow Argentinians freedom from poverty and political oppression, while you also deny self-determination of the Islanders you are childishly jealous of.
You are so full of hate and disdain that you refer to your own poor as peasants and worthless.
You sound like an unstable psychopath and a Security Threat, to me.
“pgerman” would do well to distance himself from you, before CSIS comes knocking...
Kickitoff is a complete idiot when you look at his public comments and especially his track record at Aerolineas Argentina and KPF.
TMBOA and he deserve each other if they think this stunt is NOT going to kill the biodiesel / bio-fuel market stone dead.
“ I am not really interested in feeding the world but rather keep all the food and minerals in Argentina to provide for Argentina rather then the white man. Simple.”
#11 I enjoy America because it is my land too bad it is littered with white trash Europeans pest who should be sent back to europe. Besides it is the white trash from europe who has abused our welcome. Good try and play again, I am not full of hate I don't arm mexicans to kill each other for my cocain as USA does.
#12 take your advise to USA, Canada, Australia or UK lol they all charge beyond 20% export tax. As little as 14% in Canada and that is regular taxes before export tax.
#13 our minerals and fuels are for Argentina to enjoy if anyone else wants it they should pay as much taxes as we wish, if you can't afford it we wish you good luck
Finding it else where, there is nothing for us to discuse here apparently Argentina biofuel is too expensive for you or white trash are cheap.
Your posts show your racism and hatred. Is everyone else to blame for your own stupidity and real or imagined misfortunes???
You sound like you must go through everyday, angry, resentful, and frustrated.
Do you need to go back 200 or 300 years to find someone to blame.
Funny that you seem to have been given the same opportunities as everyone else in a Commonwealth society , and yet you froth with anger and want to deny everyone else any happiness. Poor pathetic sad soul you are!
Odd that you cannot speak English, the first language of North America (dominant language of global relations, I might add), makes me suspect that you are of South American aboriginal ancestry. If that's the case, the Euros you should be racist towards, would be the Spaniards and Argentinians who wiped out those people and disenfranchised them. Right?
However, I suppose that the Argentinian ranting and raving Peronist bandwagon is a good on to jump on - they take no responsibility for themselves either, and they too blame other ethnicities.
Perhaps you're angry at yourself for being in bed with the Peronists and genocidal Argentinians???
I know you will rationalise your hatred somehow LOL
Looking forward to your answer. You won't tell me the truth, but let's hear you lie to yourself.!!!!
What it doesn't seem to understand is that its salary of ARS$50 per diem is eroding to the tune of 30% per anum.
Poor old P-H, soon going to be out of a job!!!!!!
I wish I'd known about La Campora earlier.
Googled them and Wiki even mentions their actions on the Internet and social media, to “harass critics of the Peronist Kirshiner government”.
Run by CFK's son, Maximo.
That explains everything - these guys know nothing.
I wonder if “pgerman” in Vancouver has bought into this intimidation and disinformation?? :-)
Now La Campora is doing illegal party politics in primary and secondary schools, so on top of the malvinista brainwashing our kids get, they are now faced with political brainwashing as well!!!!!
I am so sorry to hear that. It's shockingly evil.
What's next , Thought Police??
Will children be turning in their parents and neighbours to the Campora Kommisar of the apartments???!!
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