MercoPress. South Atlantic News Agency
Argentina applies tax hike on bio-diesel exports and lowers price for local market
The tax which will go to 32% from 20% becomes effective Saturday 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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Read all commentsJolly good. This should ensure that other countries reduce their demand for argie bio-diesel. Logically, an export tax is paid by the exporter not the foreign importer. Of course, the exporter can try to pass some of the tax increase on to the importer. What fun when the foreign importer says “No thanks”!
Aug 11th, 2012 - 11:40 am 0Ah, CFKs economic model in action.
Aug 11th, 2012 - 11:48 am 0Subsidise 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.
The reality is NOBODY wants products manufactured in Argentina. The quality of Argentine produced products is laughable. The appliances both small and large last about 3 months until they break down. Cheap, shoddy materials, and the designs look like things that I found in my grandmothers basement in 1960. So if you like cheap, retro imitations that don't funcion and need to be constantly fixed, then go for the Argie junk. The factory workers work about 5 hours per day, for inflated salaries, and if their boss asks them to do anything they complain to the union shop steward, who files a lawsuit or calls a strike against the factory owner. This is how Argentina works! It's the biggest failed experiment ever, called the “República Argentina” that is ruled by the criminal Cristina Fernandez de Kirchner (a/k/a scrotum neck) that has stolen BILLIONS of dollars from the Argentine people, tries everything in her power to squash her detractors, silence the press, opress the citizens, steal their money with extorsive and invented taxes, it's well known that she never even finished her law degree but says she is a a lawyer, her children the horribly ugly Florencia and pudgy fat Maximo have high ranking government positions but have never set foot in a university, a vice-president Amado Boudou who is a small time criminal mafioso who owns companies that he awards government contracts to for millions - Argentina is a bastion of modern day CORRUPTION - all countries should avoid doing business with Argentina like it was a PLAGUE - this Kirchner disaster cancer must be taken down and thrown to rot in jail forever along with her cronies - down with this PERONIST garbage who talk about “social justice” and are only interested in their own power and wealth and do NOTHING for the citizens of the country but steal their hard earned money and possessions and talk about how awesome they are. Cristina Kirchner even once said that “god wanted her to be president and rule Argentina”!
Aug 11th, 2012 - 02:03 pm 0Commenting for this story is now closed.
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