Paraguay’s Industrialists Issue ‘Absolute Rejection’ of Tax Increase Proposals

Paraguay’s industrialists have issued what they called an “absolute rejection” of proposals to raise taxes, arguing that the country’s fiscal problem comes from spending rather than investment.

The Paraguayan Industrial Union made its position public after five days of strikes by public-sector doctors seeking higher salaries. Political figures have proposed increasing state revenue to cover overdue payments and salary increases for doctors and other public employees.

Senator Silvio Ovelar, a member of the governing party, proposed raising personal income tax from 10% to 14% and corporate income tax from 10% to 15%. He said the principle should be that those who earn more contribute more. His calculations put the additional annual revenue at about $700 million.

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The public budget has for years been a spoils system for wasteful spending and irresponsible administrative decisions.

The industrial union rejected new taxes without addressing what it described as years of poor public administration. “The public budget has for years been a spoils system for wasteful spending and irresponsible administrative decisions,” it said. The union added that politically convenient decisions had brought Paraguay into its current zone of risk.

Rather than focusing on specific tax proposals, the industrialists urged a serious and responsible debate, without delay, on reforming the structure of public spending. The dispute places the government’s search for additional revenue against the business sector’s demand for spending reform.

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Those who earn more should contribute more.