Taxes and International Prices Damage Agriculture

The recent fiscal reform, changes in social charges in Nicaragua and low international prices are affecting the competitiveness of the sector.

Friday, March 22, 2019

At the end of February 2019, in the midst of the country's political and economic crisis, the National Assembly approved a tax reform that increases the income tax of large taxpayers from 1% to 3%.

See "More Taxes in Times of Crisis"

In addition, reforms to the Nicaraguan Social Security Institute (INSS) were implemented, consisting of a 19% to 21.5% increase in the employer's quota for companies with fewer than 50 workers, and in the case of companies with more than 50 workers, the proposal is to increase it from 19% to 22.5%.

Mabel Arévalo, executive director of Agroesnica, said that "... the direct impact of the implementation of fiscal reforms plus the increase in the INSS means an annual increase in production costs between $700,000 and $800,000 approximately, a cost that we cannot pass on to our selling prices because we do not put the prices of international markets."

Also see "How to Oppress an Economy"

Michael Healy, president of the Union of Agricultural Producers of Nicaragua (Upanic), told that "... to the existing economic deterioration 'we must add all the economic measures that the government has taken. While unemployment increases and the loss of purchasing power of Nicaraguans, the agro-export sector will not be able to influence prices in international markets and will not be able to transfer costs to their products."

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