DEMONSTRATORS ROCKED the government of Bolivian President Gonzalo Sanchez de Losada in mid-February in an outpouring of rage against new attacks on their living standards.

The rebellion on the streets of La Paz, Cochabamba and other cities began two days after Sanchez de Losada decreed a 12.5 percent hike in the income tax for workers earning four times the minimum wage. In a nation ravaged by unemployment-estimates of joblessness range as high as 80 percent-the new tax would have gouged full-time workers by raising salary deductions to more than 30 percent.

When Bolivians learned that an International Monetary Fund (IMF) ‘structural adjustment’ plan lay behind the government’s decree, they spoke out in protest. Sanchez de Losada said that the tax was necessary to comply with an IMF requirement that Bolivia reduce its government deficit. To many, the president appeared as a lackey of international bankers.

Violent clashes in the days that followed left 33 people dead and 170 wounded in La Paz, Cochabamba and elsewhere. After responding with iron repression, Sanchez de Losada sought to save his own skin, putting the hated tax on hold and vowing to maintain the buying power of workers’ wages. He later asked for resignations from his entire cabinet. But whether this combination of repression and concessions will save his presidency is an open question.

The street battles broke out on Tuesday, February 11. La Paz police walked off the job at nightfall after hearing that they would get only a 2.2 percent raise-nowhere near enough to offset the new tax. They demanded repeal of the tax and a 40 percent salary increase. La Paz firefighters, as well as police in the cities of Cochabamba and Santa Cruz de la Sierra, joined the job action later that night.

The next day, a march by high school students from the Colegio Fiscal Ayacucho de La Paz set in motion the events that brought tens of thousands of Bolivians into the streets. As the students protested outside the presidential palace in La Paz’s Plaza Murillo, military police inside the palace used tear gas against them. The students refused to disperse and hurled rocks back at the soldiers.

Bombarded by more gas canisters, the students withdrew to a street corner controlled by mutinous city police. As the military police advanced in pursuit, city police sheltered the students and returned fire-first with tear gas, and then with live ammunition.

Windows in the presidential palace near Sanchez de Losada’s office were sprayed with bullets as he hid inside. Masses of people jumped into the fray on the side of the students and the city police, demanding the resignation of Sanchez de Losada and his vice president and cabinet.

Demonstrators set fire to three government buildings in La Paz, as well as the headquarters of the two political parties that make up Sanchez de Losada’s governing coalition. Office buildings and some local businesses were ransacked in the city center.

In El Alto, the poorest part of La Paz’s greater metropolitan area, demonstrators torched City Hall, the Customs Office and a Coca-Cola plant. In the city of Cochabamba-a bastion of Bolivia’s resistance to austerity policies-200 people were arrested, and activists blocked roads, disrupting traffic between their city and the tropical capital of Santa Cruz.

By late Wednesday, armored vehicles carrying soldiers with painted faces and fixed bayonets had been mobilized across the country. At 4 p.m., Sanchez de Losada announced that he would withdraw the tax proposal from Congress.

But a general strike called earlier by the Confederation of Bolivian Workers (COB) went ahead as scheduled on Thursday morning-with workers demanding that Sanchez de Losada get out of office.

The tax rebellion builds on struggles against the IMF, World Bank and Washington’s neoliberal economic program-dating back to the great victory against water privatization in Cochabamba during spring 2000. Since then, Bolivia has been governed by three presidents, but each has lost even more legitimacy.

February’s revolt can only further discredit a government that puts the IMF-and the interests of Bolivian and transnational capitalists-ahead of the desperate needs of the majority.

Sanchez de Losada is promising a ‘kinder, gentler’ pace of austerity in the wake of the carnage. Even the IMF has softened its demand for deficit reduction-to make it easier for the government to ‘move in the right direction’ without sparking new protests.

But political momentum is clearly on the side of the tax protesters, coca farmers, indigenous movements, and the employed and unemployed-all those who in recent months have risen up against a system that offers nothing but misery and injustice.

The government and the IMF are bargaining for time in which to regroup. The moment to press the struggle against them is now.

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