Argentine Supreme Court agrees to hear case on grain export taxes

BUENOS AIRES, Argentina (AP) -- Argentina's Supreme Court agreed Tuesday to hear case brought by a rural governor who represents thousands of striking farmers who want new taxes on grain exports to be struck down.

San Luis state Governor Alberto Rodriguez Saa says the March 11 hike in export taxes is unconstitutional because it does not fairly redistribute the extra revenue to provinces where most of the grains are grown.

A majority of the additional tax income stays in central government coffers, he says - a potential violation of Argentina's federal tax law, which redistributes tax revenue among the nation's 23 provinces based on population and need.

The tax hikes, which increased levies on soy, wheat, corn and sunflower seeds by more than 10 percentage points to nearly 50 percent, have sparked a three-month standoff between president Cristina Fernandez and thousands of farmers who suspended exports on and off for 90 days in protest.

Fernandez has refused to repeal the tax increases, and Justice Minister Anibal Fernandez told reporters Tuesday that she considers the «case closed.

Saa's suit asks the Supreme Court to repeal the tax increase and require the central government to pay San Luis province the share of additional tax income it would have received had profits been lawfully distributed.
Saa ran against Fernandez for president last October, when she won nearly 45 percent of the vote, while Saa placed fourth with 7.7 percent.

The case seeks to make the Supreme Court the newest mediator in a conflict that has crippled the nation's rural economy, caused scattered food shortages and raised the specter of a recession.

A national ombudsman has also intervened, calling on the government to negotiate with Argentine farm leaders. Government officials refused to attend meetings this week, saying the ombudsman has no authority over tax issues.

Thousands of angry farmers threatened to resume a fourth round of strikes on Friday if progress is not made.
Fernandez on Monday announced plans to use 60 percent of the government's additional grain tax revenue to finance the construction of new hospitals, and 40 percent to build rural roads and housing for the poor. The cash - an expected US$1.5 billion a year based on current grain prices - would be stored in a special fund, a statement from the president's office said Tuesday.

Fernandez said the money would be administered by municipalities and provinces, rather than the central government, but gave no specific details.