Paraguay is discussing ways to expand public health funding amid a nationwide doctors’ strike called by Sinamed for August 24–28, 2026. Proposals range from a selective increase on tobacco to changes in VAT and income taxes, while economists and business leaders argue that any increase should be accompanied by better management of public spending.
Liberal Senator Líder Amarilla proposed concentrating the increase on products associated with health harms, without raising taxes that would affect consumers indiscriminately. He suggested raising the tax burden on cigarettes from 22% to between 44% and 50%. Amarilla said the additional revenue could fund treatment for smoking-related diseases and criticized oversight of companies in the sector.
The senator also made broader tax reform conditional on stricter controls over public spending. As an example of possible inefficiency, he questioned the projected cost of rehabilitating Avelino Martínez Avenue in San Lorenzo, which he considered disproportionate.
In the Chamber of Deputies, Diosnel Aguilera of the Authentic Radical Liberal Party (PLRA) supported raising the Selective Consumption Tax on tobacco, grains and large fortunes, but rejected an increase in Personal Income Tax. In his view, that option would shift the cost of the state onto the poorest people. The lawmaker also criticized President Santiago Peña for taking part in a rally stage while doctors continued their mobilizations, and linked the strike to inadequate salaries, infrastructure, equipment, medicines and supplies.
Government Senator Silvio “Beto” Ovelar brought the model known as “10-10-10” back to the center of the debate, based on 10% rates for VAT, Corporate Income Tax and Personal Income Tax. At a meeting with officials, lawmakers and medical representatives, he mentioned raising VAT to 12% or corporate tax to 15%, arguing that higher-income taxpayers should pay more.
Economist Jorge Garicoche warned that increasing revenue without changing how the state uses its resources would be only a temporary solution. He called for public-finance reform, a new fiscal-responsibility law with active fiscal councilors and a review of tax exemptions. He also included a reform of the entire pension system on the agenda, rather than only the Fiscal Fund or the Social Security Institute, as well as investment in human capital, especially education and health.
Garicoche stressed that hospitals must be planned together with staff, working conditions, maintenance and supplies. “I want my daughters, when they go to see the pediatrician, to find the pediatrician with all the lights on and not coming off an 18-hour shift,” he said, arguing that quality of care should be a public-policy goal.
Ricardo Dos Santos, president of the National Chamber of Commerce and Services of Paraguay (CNCSP), warned that frequent changes to the tax system could reduce predictability and deter investment. He cited low formalization—the Ministry of Economy and Finance estimates that only 30% of workers are in the formal sector—and called for rationalizing hiring, combating waste and directing resources to infrastructure, productivity and formalization before raising taxes.