MercoPress. South Atlantic News Agency

Argentine farmers blitz stops lawmakers vote on land tax increase

Presidential hopeful Daniel Scioli faced an unexpected defeat

A last-minute lobbying blitz by farmers in Argentina's top grains-producing province stopped lawmakers from approving a tax increase that some growers said would force them to sell their fields.

Buenos Aires provincial lawmakers loyal to presidential hopeful Governor Daniel Scioli failed to assemble a quorum in the Chamber of Deputies on Thursday after two days of demonstrations and legislative arm-twisting by farmers in provincial capital La Plata.

Angry soy, corn and wheat growers marched in the streets and called a five-day ban on local grain sales that started Wednesday to protest the bill, which they said would raise property taxes by up to 300%.

It was a surprise setback for Scioli, who had been expected to easily pass the bill which he says, is needed to cut his province's fiscal deficit.

Wall Street sees Scioli as Argentina's best hope for a business-friendly president to be elected in 2015, when two-term incumbent Cristina Fernandez is scheduled to step down.

“They are not going to sink this proposal,” Chamber of Deputies President Horacio Gonzalez told state media, saying he may try again next week to open debate on the measure.

Argentina is the world's No. 3 soybean exporter and its No. 2 corn supplier. It is also the top global exporter of soy-oil, used in cooking and in the booming bio-fuels sector. Buenos Aires accounts for most of the country's grains output.

Scioli says his tax bill is needed to reflect steep land value increases that have gone unrecorded by tax collectors over the last 15 years, while urban property owners have undergone a number of reassessments.

Farmland prices have risen along with global food demand, which is expected by the United Nations to double by 2050 as world population hits 9 billion. Argentina, with a fertile Pampas grains belt bigger than the size of France, will be crucial to feeding an increasingly hungry world.

But farm investment in Argentina lags that of its South American neighbors due to high uncertainty over policy.

Cristina Fernandez's strongest supporters want to end the legal ban on third presidential terms. Scioli says he is interested in running for the top office, but only if Fernandez makes no move to change the constitution to allow another re-election.

She is blamed by international investors for isolating Argentina with state-centric policies including import and foreign exchange curbs that have hurt business confidence.

She has also drawn criticism for this month's nationalization of oil company YPF.

Scioli tax measure is aimed at raising about 600 million dollars in yearly revenue. Provincial Economy Minister Silvina Batakis denied claims that the planned increase would place a debilitating burden on growers and blamed the farm sector's aggressive lobbying for slowing the bill's progress.

The grain-selling strike by growers is not expected to affect exports. But if the tax hike finally goes through, more strikes could follow, possibly slowing international shipments.