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Óscar Orúe proposes IPS reform after 40 years without changes; Esperanza Martínez responds
🇵🇾 Paraguay /Elections & Politics

Óscar Orúe proposes IPS reform after 40 years without changes; Esperanza Martínez responds

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

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  • Óscar Orúe, director of Paraguay's National Directorate of Tributary Revenues (DNIT), called for a structural reform of the Social Security Institute (IPS), noting it has not changed in 40 years despite five tax reforms.
  • Senator Esperanza Martínez countered that the IPS's issues stem from high labor informality and employers' non-compliance with contribution obligations, not a lack of legal reforms.
  • Martínez questioned the effectiveness of economic reforms and the expansion of the maquila regime if they do not increase formal employment and IPS contributors.

Óscar Orúe, head of Paraguay's tax authority, has urged a comprehensive reform of the Social Security Institute (IPS), highlighting its stagnation over the past four decades. Speaking before the Senate's Finance and Budget Committee, Orúe pointed out that while Paraguay has undergone five tax reforms in the last 40 years, the IPS remains structurally unchanged.

The IPS has not had a reform for 40 years, and we have already had five tax reforms in 40 years. I think we can start studying as a country a reform that updates, modernizes, and is much more financially balanced.

— Óscar OrúeArguing for the necessity of reforming Paraguay's social security system.

His comments came during the analysis of a bill to update tax exemptions for international sporting events, investment laws, and the maquila regime. Orúe clarified that these specific tax benefits do not directly fund the IPS, as it operates as an autonomous entity. However, he seized the opportunity to advocate for a national discussion on the sustainability of the social security system, proposing a reform to modernize and balance its finances.

We have laws that oblige employers to contribute to the IPS, but that is not fulfilled. Companies that contract with the State should be up to date with their workers, and that does not happen either.

— Esperanza MartínezHighlighting employers' non-compliance with IPS contribution obligations.

Senator Esperanza Martínez offered a different perspective, arguing that the IPS's problems are rooted in widespread labor informality and employers' failure to meet their contribution obligations, rather than a deficiency in legal frameworks. She noted that despite various economic reforms since 2013, the number of IPS contributors has seen little growth. Martínez cited sectors like private security and cleaning services, where compliance issues persist even in state-funded contracts, and questioned the real impact of economic growth and the maquila regime on formal employment if IPS contributions are not increasing.

Where is the formality? Where is the real employment generated by the maquila if the IPS contributors are not increasing?

— Esperanza MartínezQuestioning the impact of economic policies on formal employment.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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