|
Paraguay Revenues
The most striking feature of fiscal policy in Paraguay, and the
best empirical evidence of the limited role of the government in
the economy, was the level of government revenues as a percentage
of GDP. Revenues in 1986 equalled slightly less than 8 percent of
GDP, the lowest rate in Latin America and one of the lowest in the
world. Tax revenues represented 87 percent of total revenues in
1986 and came from taxes on goods and services (32 percent), net
income and profits of managers and corporations (15 percent),
international trade, mainly imports (14 percent), and real estate
(11 percent). The remaining 28 percent came from a variety of other
sources, including stamp taxes. Paraguay had no personal income
tax, state tax, or local taxes. Nontax revenues, which included
profits from parastatals, represented the remaining 13 percent of
total revenues. Although revenues were greater than expenditures in
1986, there was a small budget deficit as a consequence of certain
exchange-rate adjustments.
The tax system was a focus of great concern. Generally outdated,
it had become increasingly inefficient through numerous ad hoc
additions to the tax code over the years. The tax system, headed by
the Income Tax Bureau, also was difficult to administer, suffered
from low collection rates, and was organizationally complex. For
example, the system comprised four autonomous collection agencies
whose boundaries were not always clear. Another of the system's
fundamental drawbacks was its lack of practical taxes, such as a
personal income tax, through which the government could
systematically capture tax revenues. More important, the lack of
tax revenues limited the government's ability to undertake public
works and provide social services. Paraguay was perhaps the only
country in Latin America whose government received encouragement
from the major multilateral lenders--the IMF, the
World Bank (see Glossary),
and the IDB--to increase its taxes. As part of the 1986
Adjustment Plan, the government proposed a progressive personal
income tax, a value-added tax, and some administrative reshuffling
of the tax administration. In 1988, however, it was still unclear
whether these policies would be enacted or had been proposed merely
for political effect.
Data as of December 1988
|
