Export Taxation: The Case of Argentina
Date
2009-05
Authors
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Publisher
University of Delaware
Abstract
This paper uses a partial equilibrium method to determine the welfareenhancing
export tax level for Argentine soybeans, which is determined to be 25.29
percent. The actual export tax level on soybeans of 35 percent significantly exceeds
the welfare-enhancing level, and the progressive export tax system that was in effect
between March and July of 2008, due to a Presidential decree, set the rate even higher,
at 44.1 percent. After examining the political and economic atmosphere in Argentina,
I contend that the deviation between the optimal and actual tax rates can be explained
by the government’s desire to generate additional revenue and protect domestic
industry. Furthermore, the current administration’s policies clearly favor the industrial
sector over the agricultural sector – two sectors of the economy that have historically
been at odds with one another.
The election of October 2007 showed the administration that they could
win handily without the support of the farmers. This realization prompted the
Kirchner administration to increase export taxes on soy twice, from 27.5 percent in
November to 44.1 percent by March. Néstor and Cristina Kirchner, each of which has
held the presidency, are focused on staying in power through electoral politics. Néstor
Kirchner’s willingness to increase public expenditures at an abnormal rate during the
election year to ensure his wife’s victory is obvious evidence of that. Export taxation
is just another tool the Kirchners use to maintain the favor of their constituents in the
industrial sector of the economy.