A system of low, uniform tax rates is credible only if the tax base is broad, the rules are neutral, and exceptional privileges are treated for what they are: hidden government spending.

Paraguay's greatest fiscal asset is not a new tax. It is the existing tax structure: a 10% VAT, a 10% corporate income tax, and a 10% personal income tax.

The Selective Consumption Tax (ISC) does not only tax final consumption; it also applies to production inputs such as fuel, machinery, and certain intermediate goods, driving up the costs of transportation, production, and final prices. The proposal calls for restructuring the ISC, reducing tax rates on non-luxury goods, and reserving the heaviest tax burden for consumption with negative externalities or luxury goods, with the aim of expanding the formal economy, broadening the VAT base, and increasing tax revenue without increasing the tax burden on production.

The “Triple 10” is off-limits. That is the golden rule of the Paraguayan government and the most valuable institutional asset the country has built in the fiscal sphere. Maintaining the 10% rate for the Value-Added Tax, the Corporate Income Tax, and the top bracket of the Personal Income Tax—and shielding it with constitutional safeguards—is not a symbolic gesture: it is a mechanism for credible commitment.

The draft General National Budget for 2027 once again highlights a structural tension: a government with high aggregate spending but weak institutional performance. The document submitted to Congress totals G. 166.3 trillion, approximately $25.7 billion at the budgeted exchange rate of G. 6,458 and nearly $27 billion if a rate closer to the market rate is used.