Peruvian protesters turn violent over tax scheme

On a stretch of the Pan-American Highway in southern most Peru, protests have turned violent yet again over the distribution of mining taxes.

The two southern provinces of Moquegua and neighbouring Tacna are in dispute over how taxes from Southern Copper‘s (U-N) operations in the region should be divided.

Currently Tacna, which hosts the company’s massive Toquepala mine, gets some 80% of the taxes Southern Copper pays, leaving just 20% for Moquegua. This despite the fact that Moquegua hosts the company’s Cuajone mine and Ilo smelter.

The reason for the disparity is that taxes are currently levied for the amount of dirt moved in mining operations as opposed to the amount of saleable metal produced.

Protesters in Moquegua want the tax system changed so that they would see more tax revenue generated from the smelter in the province.

And while the demands of the protesters are in line with the views of President Alan Garcia, congressional support has been harder to come by. And without it, no changes can be made.

But while Garcia may sympathize with the idea behind proposed changes, no one in the government is condoning the protesters tactics.

Demonstrations started with blocking the stretch of the Pan-American highway near the Tacna border that is so important to the country’s economy, but escalated into violence with some 10 people wounded and three police officers taken hostage.

Southern Copper boasts the largest copper reserves of any publicly traded company, and is majority held by Grupo Mexico.

Problems in the area began early in the summer when some 60 police officers were taken hostage in attempt to pressure the government into a new tax distribution scheme.