Cardenas Says Colombia to Consider Dividend Tax to Aid Farmers

Colombia will study a tax on dividends to pay for increased help for the nation’s struggling agricultural sector, Finance Minister Mauricio Cardenas said.

The government will consider various proposals from lawmakers to pay for an increase of between two and three trillion pesos ($1-1.5 billion) in the country’s 2014 budget, Cardenas said today in an interview on Caracol Radio. These also include postponing a planned phasing out of a 0.4 percent tax on banking transactions.

“Extraordinary situations call for extraordinary measures,” Cardenas said. “We understand perfectly the difficulties Colombian agriculture has right now, and the great need to give it additional resources.”

Coffee growers, dairy producers and other agricultural workers have blocked highways and staged protests since Aug. 19 over the government’s trade and farm policies, which they say reduce their incomes. Colombian President Juan Manuel Santos’ approval ratings fell to a record low in a Gallup poll published yesterday.

In December, Colombian lawmakers rejected a proposal to introduce a dividend tax as part of a tax reform bill.

Colombian agriculture has been hit by a 21 percent drop in coffee prices this year, while Cardenas has said repeatedly that a strong peso has hurt farmers. The Colombian currency has strengthened 46 percent over the last decade, the best performer among major Latin American currencies tracked by Bloomberg.

The number of Colombians with a favorable image of Santos dropped to 21 percent at the end of August from 48 percent in June, according to a Gallup poll published by Caracol Radio and El Tiempo newspaper.

The peso strengthened 0.3 percent to 1940.11 per U.S. dollar yesterday.

To contact the reporter on this story: Oscar Medina in Bogota at omedinacruz@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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