ASUNCION Paraguay's president on Wednesday vetoed a law that would have slapped a 10 percent tax on soybean exports, saying that the measure threatened to slow economic growth in the land-locked South American country.
On October 9 Paraguay's lower house of Congress gave final legislative approval to the bill, which promised to provide $300 million per year in government revenue. It was opposed by the country's key farm industry.
"Even if this measure would increase government revenue over the short term, it could work against economic growth over the medium and long term," President Horacio Cartes said a statement, which called the proposed tax "regressive."
The statement came just after Paraguay's central bank raised its 2013 growth forecast to 13.6 percent from 13 percent.
Paraguay is the world's No. 4 soybean exporter. Neighboring Argentina, the third biggest supplier of the oilseed, charges a 35 percent tax on international shipments of the bean, which growers say weighs heavily on their profits.
Paraguay is set to harvest at least 9.3 million tons of soy in the 2013/14 crop year, matching the previous season's record crop, according to Agriculture Minister Jorge Gattini.
The grains business in Paraguay is largely controlled by global agricultural companies such as Bunge (BG.N) and Archer Daniels Midland (ADM.N).
(Reporting by Daniela Desantis; Editing by Leslie Adler)