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President Mujica claims attempts to weaken him government “so I have to leave”

Saturday, June 11th 2011 - 11:16 UTC
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Vice President Astori reaffirmed loyalty and support for the president several times Vice President Astori reaffirmed loyalty and support for the president several times

A controversy over land taxes inside the Uruguayan government exposed claims from President Jose Mujica that “meetings are taking place to debilitate his administration and even possibly remove him”

“I’ve been told of meetings where people around are saying that there is a situation of misgovernment in the country, so that I have to leave”, President Mujica supposedly revealed last Monday during the weekly cabinet meeting.

He added “with good manners you can take me where ever, but don’t forget I’m an old warrior who made it to the presidency against all odds and against what everybody said, and this president I can assure you is firmer than a post”.

The fiscal controversy referred to farm land erupted openly when President Mujica presented a simple three step scale for taxing land owners beginning at 2.000 hectares and which according to official government figures involve approximately 1.200 landholdings with total revenue of approximately 60 million US dollar.

The first justification was that big landholders who don’t exploit their farm must be taxed; later the purpose of the tax collected was for infrastructure.

Vice-President Danilo Astori immediately reacted claiming such a scheme would be contrary to the current tax policy on profits and changing the rules, ‘even a minor change’ would have an impact on investors’ decisions.

In his daily broadcast Mujica said “we are not for taxing; we want farmers to multiply the country’s wealth, but we also want to prod those who produce little but have a lot of land”.

“We want those who benefited from soaring land prices to pay, those who have not increased production and possess a lot of land”, added Mujica. “We are talking about those who purchased land at 300 US dollar the hectare which is now worth 3.000 USD”.

But economist Astori said Uruguay had already tried taxing land ownership and it did not work. It also contradicts the recent tax reform implemented by the ruling coalition which targets production and profits.

“I’m thinking about the future, because when you send a signal, no matter how modest, you are suggesting that further changes can be expected in the future and that generates uncertainty, and uncertainty is not good for investors”, replied Astori in radio interviews.

Astori is supported in the controversy by the ministers of Economy, Agriculture and Public Works, while Mujica has the backing from the Planning Office, Politically in the catch-all-coalition, Communists, the former guerrillas group to which belongs Mujica, Socialists and other smaller groups support the president, while the more middle of the road groups are behind Astori.

However, when the main actors of the controversy realized the impact of Mujica’s statements leaked to the press and saying that “there was a movement to debilitate him and maybe oust him”, they rapidly tried to overcome the situation.

Vice-president Astori in a hastily organized political rally and next to lawmakers from his group said that it was good to have different points of view, ‘that’s democracy’ but also insisted that this does mean disunity or challenge, “on the contrary there is no question about our loyalty and support for the president”.

Astori made it a point to repeat several times the words “loyalty” to the president. In a similar attitude First Lady and Senator Lucia Topolansky went on a round of radio and television interviews saying “nobody is questioning the president’s authority”, democracy means debating and respecting ideas.

“The government of President Mujica is going through its best possible moment, the numbers of the economy, growth, investment, employment have never been so good, and this is the effort of the ruling coalition with its economic team”, underlined Mrs Mujica.

Astori, with the support of outgoing former president Tabare Vazquez, disputed in 2009 the ruling coalition’s presidential candidacy but lost to Mujica. It was an acrimonious campaign and it is no secret that there are rifts between the two sides referred to some aspects of economic policy. The Communist party leader that backs Mujica’s proposal went as far as calling Astori a “verbal terrorist”.

So far the Uruguayan economy has been growing sustainedly for the last eight years and the big question is what could happen if there is not a soft-landing when the cycle begins to moderate.

However whatever happens in Monday’s next cabinet meeting, one, two or finally one only land tax bill, President Mujica’s authority has been questioned, even debilitated and follows another pyrrhic victory only a month ago when the Uruguayan congress finally voted not to annul a much debated amnesty law benefiting military and police officers that allegedly committed human rights crimes during the military dictatorship, 1973/1984, the so called Expired Crimes bill.

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  • Kirk Nelson

    To all goverments, the easier way to increase revenues, is by implementing new taxes or by increasing more taxes to the existing tax code and of course Uruguay is not an exceptional country.
    Producible lands are wealth, which means an active or an asset posted on the country's balance sheet, but cash its better, because the region and the country will have more liquid funds to cover payments, which in general end up to cover public expenses such as salaries, maintenance and repairs and goverment programs.
    But imposing new or more taxes certainly would make a big change , because more cash flow and viability cash on hand, that is if its fiscal monetary policies are played correctly, so at some point and time it must be returned to its citizens in several forms, such as new infrastructures, tax rebates, to create or expand credits to improve or help small businesses, to social programs, to improve the inveronmental conditions and so making a positive impact to the economy in general, because it will reduce unemployment, become more competitive domestically and internationall and overall the standard of living per individual will become healthy.
    So, taxes on sleeping/producible land should and must the imposed, but
    rationally in such way voiding economic dysfunction and investment as well. Another way and upon land location, the government should give credit to landowners to make residential units or give financial help to those who want to expand in the agriculture industries or developers.
    Another tactic is to swap asset for asset.
    One can see how local and fiscal authorities work together, while on the other hand the public and private sector would develop new business law and regulations . Therefore, I do not see why Uruguayans are skeptical, but I see that Mr. Mujica does not possesses strong character to delegate his power and debate openly with all those who are not in favor of this type of revenue measure.
    Kirk Nelson,
    New York, UDA

    Jun 11th, 2011 - 07:07 pm 0
  • GeoffWard

    If we have a situation where (foreign?) land speculators are buying up rural Uruguay and letting the land go idle, then the Government is right to do something about it.

    Land tax (my! what a radical Left concept) seems good to me, but only if the tax-take goes on advanced infrastructure that people can see, appreciate and use.

    Jun 13th, 2011 - 03:05 pm 0
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