As Argentine soybean farmers raced to get their crop in the ground last fall, they at least can say they’re facing some potentially lower costs down the road: The administration announced a plan to cut the “retentions”—export taxes on soybeans—by half a percent monthly. In December the withholdings were at 30% and will end 2018 with a rate of 24%. By December 2019, they will be at 18%.
Argentina’s soy retentions were at 35% during the previous presidency, and were cut to 30% four days after the new administration of Mauricio Macri took over the reins of government in 2015.
Soy export taxes coming down
Similar export taxes on wheat, corn, meat and other products were wiped out altogether, but the soy retentions weren’t. Those taxes go, in part, to support individual infrastructure projects in the provinces, and to help support pension schemes—both popular items among the Argentine electorate.
Observers say some of that lost money from the retentions may end up getting substituted by raising other taxes, like the income tax.
A lot of money
Argentine media report that those may be some hefty tax increases, as the cost of lowering the soybean retentions over the year is estimated to come to over $1 billion in income. That said, lower soy retentions have been estimated to put an additional $373.2 million in soybean farmer income taxes into government coffers, as producers facing lower retentions make more money on the crop.
Experts also guess that more money will circulate, generally, in the farm economy, generating greater tax income from more sales of goods and services in the sector. More money in income taxes added to generally greater economic activity resulting from farmers paying less to export soybeans, say experts, could actually net an additional $57.4 million in city, provincial and federal taxes, overall, than what the current soy retentions are bringing in.