Versión en español del editorial
Minister Peña believes that by succeeding to increase tax revenues there would be a greater margin to further indebt the country, without exceeding the deficit ceiling established by the Fiscal Responsibility Law. In other words, an increase in tax revenues would allow the Government to issue more bonds, and explicitly avoid any precise reduction of public debt. In short, they want to increase revenues to indebt Paraguayans more today, tomorrow and henceforth and not to release them from any financial burden already weighing against their backs. We here contend that tax revenues should increase precisely to avoid further indebtedness.
Minister Peña now claims that he aims to reduce tax evasion and the informal economy without altering the current tax rates, which would be optimal. The problem is that we cannot believe him. Doesn't this Government know that the officials of the National Customs Directorate (DNA), for example, illegally become richer and unscrupulously exhibit the proceeds of their larceny in public? Nelson Valiente, the director, was appointed by President Horacio Cartes and reports to the Minister of Finance, according to the Customs Code. None of them can claim ignorance of the corruption in customs, as large scale larceny takes place right under their noses, without them showing the least amount of remorse. Whoever allows subordinates to steal, commits a crime, and whomsoever keeps dishonest officials in their respective positions, engages in serious political irresponsibility.
The question arises then, why do President Cartes and Minister Peña continue to tolerate stealing freely from Customs, as is public knowledge? There are only two answers to this: either they are involved in defrauding the treasury or they are politically committed to those sponsoring the thieves. There is no other possible explanation for their outright sloppiness. Thus, the Minister of Finance cannot expect to be taken seriously when he announces a fight against tax evasion and the underground economy, while in Customs, which reports to him, a daily feast is taking place at the public's expense.
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For Minister Peña, the most viable course is to avoid pointing fingers at officials who have powerful political patrons. It is much easier to indebt the country than to confront the criminal tax evaders and smugglers leveraged from above, usually by senators and deputies who receive generous "briefcases" in exchange for looking the other way.
Reducing the informal economy, which represents 40% of GDP, should not be very difficult for the Minister of Finance, provided he has the courage to confront influential politicians.
In a small country of only seven million, the "underground" economy is not underground at all: most of it is in plain sight for those who have eyes to see. The point is that there are very strong interests linked to political power, which prevent Customs and the Undersecretariat of Taxation from collecting taxes from all who pay. It is much more comfortable to charge taxpayers who already pay, and allow criminals associated with the big shots in power to operate freely.
Former Deputy Minister of Economy, Manuel Alarcón, said recently that as far as he knows a strategy to incorporate tax evaders is not in the books, but this should not surprise anyone. Even if they were to design it, with the cooperation of some international organization, this wouldn’t imply any sort of implementation. The thing is that the advice of the International Monetary Fund (IMF), for example, is good only to allow foreign technicians to pay a short visit to Asuncion, and for the Government to play a media comedy pretending that it’s committed to improving the management of its collection agencies. Recently, at the request of Minister Peña, the IMF provided advice to Customs with no appreciable results, of course.
It is not about technology or flowcharts, but about honesty in the management of public affairs. And it is about having the courage to dismiss the crooks and send them to jail, without fearing their sponsors. Horacio Cartes and Santiago Peña have neither.