Argentina vs. Mexico – 2 contrasting policy decisons to deal with food price rise

by Dave

The tax system Argentina announced March 11 levies soybeans and sunflower seeds at variable rates that can exceed 40 percent, depending on market prices, compared with a previous fixed rate of 35 percent. The top tax rate is 95 percent.

President Cristina Fernandez de Kirchner, whose public support has plunged during the dispute, has defended the increased export tax. She says it will curtail inflation and let the government redistribute wealth to poorer regions and people.

VS.

President Felipe Calderon announced on Monday that the government will give small monthly cash subsidies to 26 million poor Mexicans — about a quarter of the population — to compensate for rising food prices.

The first one has created shortages and fueled further food price inflation, the second has caused no such disruption.

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