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Argentine Workers Strike Over Income Tax Rate

Striking Argentine bank employees march through the financial district during a one-day nationwide strike in Buenos Aires, March 31, 2015.

Argentina's public transport networks ground to a halt Tuesday, while port workers at the grains export hub of Rosario refused to work and banks shut their doors as a one-day strike to back demands for changes to income tax rates gripped the country.

The strike caused major disruptions to domestic air travel, garbage was left piling up on sidewalks and many businesses stayed closed as employees struggled to reach work, frustrating owners already grappling with a weak economy.

In the face of high inflation, the transport unions spearheading the strike are demanding Argentina's leftist government raise the minimum threshold on paying income tax.

The unions complain that more workers will have to pay tax if double-digit salary hikes designed to keep pace with inflation are awarded without lifting the threshold for the lowest tax bracket.

The government said inflation was 24 percent in 2014, but private economists estimate it was about 35 percent.

The prospect of intensifying labor disputes as unions knuckle down to wage negotiations is another headache for President Cristina Fernandez, who is battling to revive a stagnant economy and avoid a deepening of the government's latest debt default.

"This strike is our answer to the government's refusal to listen to our plea that it's unfair to keep deducting money from our wages,'' Pablo Moyano of the powerful Truck Drivers Union told Radio con Vos, calling the walkout a "total success."

"The government has to listen to the demands of workers,'' said bank employee Claudia Ferretti, who complained about the burden of taxes on her income. "Inflation is eating into what we have left in our pockets after taxes.''

The owner of a small textiles factory who gave his name as Daniel said: "I understand the claim for changes to income tax, but I can't afford to have the factory standing still for even a day.''

With a presidential election looming in October, Fernandez will want to avoid a wave of politically damaging protests. Government insiders have expressed concern that unions sympathetic to the opposition will intensify their demands and launch more strikes in the months ahead.

One source familiar with Fernandez's thinking said earlier this month that the government was considering altering the lowest tax bracket. But over the weekend, Economy Minister Axel Kicillof said no changes were planned.

"This strike is hurting many people who want to get to work,'' Cabinet Chief Anibal Fernandez told reporters in a daily briefing. Asked whether there was a political undercurrent to the strike, he replied: "We're in an election year.''