Bonds News

Paraguay's opposition candidate to propose tax hikes on farm sector

ASUNCION, Jan 29 (Reuters) - Paraguay’s opposition coalition to the conservative Colorado Party in April elections will push to increases taxes on the nation’s large agricultural sector, its presidential candidate told Reuters.

Efraín Alegre, who will face off against Colorado’s Mario Abdo, said the plan would be presented in two weeks and include changes to taxes on the trade of soy, wheat and corn.

The landlocked South American country is the world’s No. 4 exporter of raw soybeans and a significant beef producer.

“We think there are changes that need to be made and that the agricultural sector needs to contribute more,” said Alegre, a former legislator and public works minister.

The proposal would also alter Paraguay’s personal income tax but not the value-added tax, Alegre said.

Taxes on the farm sector are a sensitive political issue in Paraguay, whose economy depends largely on exports of soy and beef.

Many say farmers do not pay enough taxes, although Treasury Ministry data shows agriculture’s contribution to state coffers has grown in the past decade to 6 percent.

The country exported $3.34 billion worth of soybeans and soy products in 2017, and its overall tax burden represents 13 percent of gross domestic product, according to the central bank.

Alegre did not provide further details of the tax plan. It was designed by Dionisio Borda, who heads his economic team and was treasury minister under former leftist President Fernando Lugo.

Alegre said he would be more cautious with debt issuance than current President Horacio Cartes, a member of the Colorado party who is barred from seeking re-election due to constitutional term limits. Paraguay debuted in the global markets in 2013 and has since issued $2.88 billion in bonds.

“This government’s indebtedness is unprecedented in Paraguay’s history, and it has not even brought results,” Alegre said. “Surely we will need resources to finance development projects, through credits or bond issuance, but it will be with a more ordered policy to maintain macroeconomic balance.” (Reporting by Daniela Desantis; Writing by Luc Cohen; Editing by Lisa Von Ahn)