Tax

Farmers reject Paraguayan president's proposed tax

AP News
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Posted: Aug 09, 2011 2:46 PM
Farmers reject Paraguayan president's proposed tax

Frustrated in attempts to have congress finance an anti-poverty program, President Fernando Lugo asked soy bean producers to voluntarily pay 6 percent more in taxes on their exports.

The response from the nation's largest farm group came in Tuesday: It's a "no."

Lugo, who has been battling cancer, has so little support in congress that when it approved an income tax law, legislators mandated it take effect in 2013, after he leaves office. He hasn't offered a press conference in two years, and expressed frustration in an impromptu radio interview on Sunday at how little he's accomplished during his single five-year term.

Lugo still hopes to expand the kind of direct subsidies that have managed to pull millions out of poverty in other countries in Latin America. The vast majority of Paraguayans are poor or indigent.

But his opponents in congress have been reluctant to expand payments to what right-wing lawmaker Carlos Soler calls an "army of beggars."

Hugo Richer, director of the subsidy program, asked Congress on Monday to triple the number of beneficiaries by year's end. Currently, the program called "Tekopora," or "beautiful people," in the Guarani language spoken by most Paraguayans, provides $50 to $100 monthly to 93,000 families who keep their children in school.

But the union of agricultural producers said its members already pay more than their share. Paraguay is the world's third-largest soy producer and farm union spokesman Miguel Noto said that from 2008 to 2010, industrialized agriculture paid $4.8 billion in taxes.

"It's not appropriate or fair to try to tax soy more," said the group's leader, Hector Cristaldo.

The fundamental problem is that without an income tax in place, the government is getting 60 percent of its $8 billion in annual revenue this year through a sales tax of 10 percent on most products, which hits the poorest the hardest.

Soy growers and other agriculture producers provide about 29 percent of revenues. Two large dams shared with Brazil and Argentina provide much of the rest, a total of about $680 million annually.