Paraguay debates controversial 10% levy on grains and soybean exports

Tuesday, July 16th 2013 - 05:40 UTC

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Minister Rody Godoy said the government is sponsoring two alternative taxes that represent 300 million dollars for the Treasury

The Paraguayan government said that the recently Senate approved controversial 10% levy on all exports of oilseeds and grains is “non applicable’ since it would need an amendment of the Customs Code, and recommends the implementation of alternative taxes.

“The levy on grain exports in non-applicable and to implement it would need amendments to the Customs Code”, said Agriculture and Livestock minister Rody Godoy at the end of the weekly cabinet meeting adding that the government supports an overall tax on agriculture, Iragro, and extending value added tax, VAT, to all the farming sector. The two bills are for consideration of the Senate.

The Paraguayan government said the decision to reject the export levy and promote the alternative taxes is the result of discussions with farmers’ associations, and estimates the alternative taxes could represent 300 million dollars for the Treasury.

Meanwhile the Senate ratified with 34 votes its support for the 10% export levy on unprocessed grains and oilseeds and left the bill for consideration of the Lower House.

Senators in support of the bill that has been floating in the house for nine years said that it was time to have soy-farmers accountable for the damage to the wildlife and losses to small farmers’ crops with their spraying, as well as recalling that heavy trucks transport of the oilseed has destroyed the country’s highways system.

“Everybody in Paraguay pays 10% VAT, only farmers are exempt on their purchases” said Senator Hugo Richer who added that in Paraguay 40% of the population live in poverty or indigence and ‘it’s time to change the situation’

The Lower House needs 41 votes to uphold the rejection of the controversial bill. Paraguay produces some five million tons of soybeans annually and has become the world’s fourth exporter after US, Brazil and Argentina.