Learn English – shall vs should

Technically, the tense should match, so since we're using the perfect tense (conditional perfect in fact), you should use was.

But both could have ... is and could have ... was are acceptable in this case.

Why? Well, it's because your clause about the paprika being similar to the bell pepper might be true for a long time, and might continue to be true even in the present, so it might be okay to use is.

Maybe not. Maybe the paprika is rotten by now, or already eaten. Then is would make no sense. But a situation continuing to the present would justify use of the present tense is.

Consider:
"I could have gone shopping, because the supermarket was near."
"I could have gone shopping, because the supermarket is near."

If the supermarket has not suddenly moved, it probably still is near – it is now, and it was then – so either one is acceptable.

But some things do not last so long:
Correct: "I could have stayed longer, because it was early in the morning."
Incorrect: "I could have stayed longer, because it is early in the morning."

Unless you are describing something in the very recent past (minutes or hours ago), the fact that it is now early probably has nothing to do with the situation in the first half of that sentence, so mixing the past and present tense in this last example doesn't really work.

There's a useful summary on Grammar Girl, which points out that...

The British traditionally use shall to express determination or intention on the part of the speaker or someone other than the subject of the verb.

But in practice it's a declining usage everywhere - particularly in recent decades, native Anglophones are much more likely to just place heavy stress on will to emphasise "resolute/defiant intention" over and above the standard "future tense" sense of the auxiliary verb.

When Practical English Usage says "shall is not used for decisions", they're talking about the kind of "voluntary, unforced" decision you might make in a restaurant...

1: "I will have the fillet steak" (usually contracted to "I'll have...")
2: "I shall have the fillet steak"

...where the first version is standard, and carries no implications beyond the fact that you've made a choice. The second version (which would be somewhat "unusual", particularly for AmE and younger speakers in general) is only likely to occur in contexts where the speaker for some reason wants to inject a note of defiance/determination (perhaps because whoever's paying the bill has asked his guests not to choose the most expensive items on the menu).

EDIT: There's also this rather quirky BrE "rule": use shall with I/we, and will with you/he/she/it/they (except when expressing determination, in which case the usages are reversed). But as that Oxford Dictionaries link implies, in practice most people don't even know the "rule" (and most of those that do routinely ignore it anyway).

TL;DR: If your coursework specifically addresses "correct" use of shall, and you have an exam to pass, remember and repeat whatever you were taught. If the distinction wasn't covered, or you're not taking an exam anyway, just use will in all cases.