Argentine lawmakers open debate on Fernandez's economic bill

FILE PHOTO: A man shows Argentine pesos outside a bank in Buenos Aires' financial district, Argentina August 30, 2018. Picture taken August 30, 2018. REUTERS/Marcos Brindicci/File Photo

BUENOS AIRES (Reuters) - Congressional lawmakers from the party of Argentina’s new president began debate on Thursday on the government’s economic proposals, whose tax hikes sparked street protests in the capital.

The bill, dubbed by the government the “Social Solidarity and Production Reactivation” project, is the cornerstone of President Alberto Fernandez’s governing program. It seeks higher taxes on grains exports, personal property and foreign assets held abroad.

“This bill marks a change of paradigm in the way income is distributed,” Sergio Massa, a member of Congress who is a Fernandez ally, said, speaking from the floor. The measure was expected to be approved by the lower House and then go to the Senate for debate.

Export taxes on wheat and corn would be raised to 15% from 12%. The tariff cap on soybean exports would rise to 33% from 30%, and scheduled pension increases would be suspended for 180 days.

The government’s proposals, which were sent to Congress on Tuesday, seek funds to bolster social spending as the new administration of the center-left Fernandez grapples with annual inflation over 50% and an economy that is expected to contract for a third straight year in 2020.

In an effort to gain support from the opposition and reach the quorum of 129 lawmakers needed to begin debate in Congress, members of Fernandez’s “Front for All” political party agreed on Wednesday to withdraw a controversial article in the bill that granted the executive branch broad powers to “redesign” government departments.

Hundreds of people in Buenos Aires protested on Wednesday against the bill, which includes a 30% tax on the purchase of foreign currencies or on the payment of services or goods bought abroad or on the internet.

Reporting by Eliana Raszewski; writing by Cassandra Garrison and Hugh Bronstein; Editing by Leslie Adler