UPDATE 2-Argentine lawmakers seek to cut grain export taxes

* President loses powers to set grains export taxes

* Opposition proposal would cut rates on soy, corn

* Analysts say bill unlikely to win approval in Congress

(Adds farm group, details of proposal)

By Nicolas Misculin

BUENOS AIRES, Aug 25 (Reuters) - Argentine opposition lawmakers have agreed on a draft bill that would slash hefty taxes on grain exports, a major source of state revenue that President Cristina Fernandez has vowed to maintain. [ID:nN21199800]

The president's so-called delegated powers expired at midnight, giving Congress the power to set export taxes. Fernandez's congressional rivals have pledged to cut the multibillion-dollar levies. [ID:nN24258042]

The proposal approved by the lower house's agriculture committee late on Tuesday, would cut the soybean export levy to 30 percent and then reduce it by 5 percentage points per year to 10 percent in 2015, lawmaker Ricardo Buryaile said in a statement. [ID:nN25152154]

"This is the result of a two-year group struggle. It is the focus of efforts of farmers across the country," said farming group Coninagro -- one of the four associations that led months of protests against the taxes in 2008.

The reform proposal, which must now be presented to the lower house for debate, would also reduce the tax on corn shipments to 10 percent from 20 percent, eliminating it completely in 2013.

Export taxes on wheat, other cereals and oilseeds would be scrapped immediately.

Chances that the measure will be approved by Congress without changes are slim, particularly in the Senate, and the president could veto any such law on the ground that it would threaten state finances, political analysts say.

Fernandez has been locked in conflict with farmers in the leading grains exporter since 2008, when a tax hike on soy exports triggered months of strikes and roadblocks.

She was forced to reverse the hike, but farmers say the current export levy of 35 percent on soybeans is still too high. Sales abroad of corn, wheat and sunseeds are also heavily taxed and the income accounts for about 10 percent of revenue.

The draft bill drawn up by Buryaile, a former farm leader, has exposed rifts between the four leading farming associations that led the anti-government protests two years ago.

Members of the Argentine Agrarian Federation (FAA), which represents smaller-scale growers, say Buryaile's proposal does not do enough to reflect vast income differences within the farming sector.

"This (proposal) maintains the current situation of wealth inequality ... but with lower taxes. So the ones who lose out are always the same -- the small- and medium-sized producers," said legislator Ulises Forte, a former FAA leader.

Despite Tuesday's agreement on the draft proposal, it must still pass through the two houses of Congress and could undergo numerous changes along the way. It could be tough for the opposition to muster a majority in the Senate.

"The Senate is key, as is the conflict between the FAA and the other farming groups because if the government changes its position and accepts sliding-scale export taxes (according to scale of production), there could be a surprise," said political analyst Roberto Bacman.

"If the bill doesn't get modified, the government would veto it, because export taxes are key to their model. It will either be negotiated on or vetoed."

Grains export taxes will total an estimated $7.3 billion in the 2009/10 crop year, boosted by a record soybean crop, according to the Rosario grains exchange.

Argentina's provinces get a share of the soy export tax revenue collected by the federal government. (Writing by Helen Popper; Editing by Lisa Shumaker) (helen.popper@thomsonreuters.com; +54 11 4318 0655; Reuters Messaging: helen.popper.reuters.com@reuters.net))