Argentina’s leftist protectionist President Cristina Fernández de Kirchner suffered a huge defeat yesterday when the Senate voted 37 to 36 to reject the system of floating-rate taxes that the government imposed in March of this year. The New York Times reports:

The new tax system raised taxes on soybeans from a fixed rate of 35 percent to a rate that has floated with global prices to more than 44 percent. Amid rising costs for farm materials, it provoked a series of crippling strikes that shut down highways for grain trucks bound for export and caused scattered food shortages.

The Kirchners justified the higher taxes as critical to plans to redistribute wealth and hold down Argentina’s food prices. But they stoked tensions by portraying the farmers as a political threat, calling them “greedy” and “coup plotters.”

Last month a series of huge pro-farmer rallies throughout the country finally pushed Mrs. Kirchner, whose approval rating had plummeted to as low as 20 percent, to take the calculated risk of sending the measure to Congress for approval. The president’s Peronist bloc controls both houses of Congress.

The vote was not expected to be so close in the Senate, but a pro-farmer march on Tuesday in Buenos Aires of an estimated 235,000 people appeared to have an impact. A government rally heavy with trade unions and labor groups drew 100,000 to the city the same day.