Thursday August 2 12:41 AM ET

Guatemala Tax Protests Turn Violent, 83 Arrested

By Tim Gaynor

GUATEMALA CITY (Reuters) - Guatemalan police arrested 83 demonstrators in street clashes across Guatemala on Wednesday, as widespread protests at an unpopular tax hike turned violent.

The Guatemalan Red Cross told Reuters that 58 people had received medical treatment after the clashes, with 44 suffering the after-effects of inhalation of tear gas.

A nationwide coalition of business and labor groups called for the protests as part of a one-day ``national stoppage'' to oppose a two-point value added tax rise to 12 percent, which went into effect on Wednesday.

Police fired tear gas rounds at stone-hurling demonstrators in clashes across downtown Guatemala City late on Wednesday, following a peaceful march by thousands of banner-waving protesters during the morning.

Scores of machete-wielding demonstrators in Totonicapan, in the central highlands some 115 miles west of the capital, torched the local radio station and burned the mayor's house to the ground, national radio reported.

A local radio station reported that one demonstrator was treated for gunshot wounds following the clash.

Guatemalan President Alfonso Portillo pushed through the reforms last week, which also include tougher penalties for tax evasion in a bid to raise the nation's tax revenues.

Tax revenue made up a paltry 9.4 percent of Guatemala's gross domestic product last year, the hemisphere's second-lowest tax take after poverty-stricken Haiti.

Several thousand demonstrators also marched in boisterous protests across central Quetzaltenango, in the western highlands, as local government offices shut down for the day.

``The municipality is with the people,'' town hall spokeswoman Lisbeth Hernandez told Reuters. ``The city government's buildings are all closed.''

National police spokesman Faustino Sanchez confirmed the arrest of 83 demonstrators in the capital, adding that some 17,000 police officers remained on alert across the country.

BUSINESS ``PARALYZED'' NATIONWIDE

Protests began last Thursday when student demonstrators clashed with police outside Congress as deputies voted the tax reform package into law in a third and final reading. Five students were injured during protests.

Stores across the capital's usually bustling central thoroughfares remained shut on Wednesday, many sealed with black ribbons and signs reading ``Closed for Day of National Dignity.''

Chamber of Commerce President Jorge Briz said around 90 percent of businesses across the country had also closed their shutters to protest the tax hike, together with growing concerns over corruption and violent crime.

``(The stoppage) has met with total support not just in the capital, but across the nation,'' Briz told Reuters in a telephone interview. ``The country's productive sector has been paralyzed.''