Miners march in Bolivian capital to protest tax increase

By Dan Keane
Associated Press
Tuesday, February 6, 2007

http://biz.yahoo.com/ap/070206/bolivia_miners_protests.html?.v=1

LA PAZ, Bolivia -- More than 20,000 miners from across Bolivia marched into La Paz on Tuesday, tossing bits of dynamite that sent booming explosions echoing through the streets in a protest of President Evo Morales' plans for a steep hike in mining taxes.

The hard-hatted miners whistled and chanted as they filed through the center of the capital city in the protest against the tax proposal, which they say would unfairly burden hundreds of small independent miners' cooperatives.

Police said they had confiscated some 284 sticks of dynamite from the protesters, along with hundreds of detonators and rolls of fuse -- all sold in Bolivia without restrictions.

After negotiations with the miners Monday night, the government announced that the cooperatives' taxes would be frozen at current levels until further notice. The proposed tax increase would be directed instead at larger private mining companies operating in Bolivia, officials said.

But the concession failed to deter the thousands of miners already gathered in La Paz's poorer twin city El Alto from marching down the hill into the capital Tuesday morning.

The tax freeze "seems reasonable to us," Interior Government Minister Alfredo Rada said at a news conference Tuesday. "We hope that this proposal will not continue to be met with intolerance and irrational actions like those of the cooperative miners this morning."

The miners' cooperatives argue that the government should not penalize their labor with higher taxes but instead focus on the mineral dealers who buy and sell their ore.

"We have asked the government not to impose this tax," Andres Villca, leader of National Federation of Mining Cooperatives, known by its Spanish acronym Fencomin. "Instead, we have asked them to look for a way to control the sale of the minerals, which is the fundamental part."

Rising international metal prices, fed in part by spiraling demand from China, have doubled the value of Bolivia's mineral exports, from $547 million in 2005 to over $1 billion last year, with cooperatives accounting for just over a third. The metals -- mostly zinc, silver, gold, and tin -- together represent Bolivia's largest export after natural gas.

But the Bolivian government collected only $45.5 million in mining taxes in 2006 and aims to dramatically increase its collections this year, perhaps to as much as $300 million.

The proposed tax increase is a first step toward Morales' announced goal of "nationalizing" Bolivia's mining sector, though how the process will proceed beyond the tax increase is unclear.

Bolivia's extensive mineral deposits are already owned by the state, which operates a handful of mines through state mining company Comibol. The rest are mined through concessions granted to the cooperatives or to international companies such as U.S.-based Coeur d'Alene Mines Corp. and Apex Silver Mines, Limited.

Morales has said that any concessions left idle or lacking in investment should be returned to the state.

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