VAT refund for pensions and other measures under scrutiny

Since 2022, once again, the discussion on the reform of the pension system began to take shape. The Executive and the Congress of the Republic have been shaping their proposals independently and at some point along the way they will meet to reach a consensus. The Legislature enthusiastically promotes some measures such as contributions through the IGV and the implementation of seed capital. During a session of the Economy Commissionthe experts gave their opinion on these and other proposals.

IGV refund for pensions

The congressmen are committed to implementing the contributions through the General Sales Tax (IGV). That is, take a percentage of the IGV or increase it voluntarily so that each time users make a consumption, a percentage is allocated to the pension fund, explains the legislator Alejandro Cavero (Advance Country).

In this regard, the economist and professor at the Universidad del Pacífico, Noelia Bernal, maintains that it is a proposal that must pass various operational filters before becoming a policy. One advantage of collecting from consumption is that we all consume, formal and informal; on the other side, in fiscal terms, it would mean a reduction in its collection for Sunat.

“I have reviewed that idea and I am skeptical. I’m not saying that it doesn’t work, I’m saying that you have to pilot it. There is no evidence of a country in the world that has implemented such a system. So, I think we should not put it in a standard without previously doing the necessary pilot”held.

Along the same lines, the former head of the Sunat Luis Arias Minaya He pointed out on his social networks that this measure “would create a tax gap, increase public debt and benefit those who have higher incomes and consume more.”

For his part, the general manager of the Peruvian Institute of Economics (IPE), Diego Macera, explained that the biggest advantage of this measure is that there would be more businesses forced to formalize because their consumers will demand a ticket; however, that impact “is very difficult to estimate.”

Seed capital for each Peruvian at birth

The proposal consists of the State directing an amount of money to each Peruvian at birth, the amount of which could be capitalized over the years, in such a way that this money is added to the contributions that the affiliate can make from the start to work, that is, at the age of 18, potentially.

The president of the Economic Commission, rosangella barbaran (Popular Force), has included seed capital as a pillar within PL 4743, which it presented on April 17, specifying that it would only be for low-income populations.

“The most valid criticism that I think is made of this scheme is that Peru today is going to make a great fiscal effort to contribute to the accounts of newborns so that they, in theory, can enjoy it 65 years from now. . (…) Peru, in 2090, would have income more similar to Spain, being pessimistic. People will say: ‘Why are they giving this money to me if they could rather have given it to my grandfather who had greater needs?’ So, what you will be doing is passing the transfer to a population that will probably be richer than us”Macera explained.

That the State and companies give a contribution

The Labor Commission is considering the idea that pensions are also financed with a contribution from the employer, since currently the Peruvian pension system does not contemplate it. Congresswoman Isabel Cortez (Together for Peru), a member of this working group, said that in Mexico the employer contributes 70%.

Bernal warned that, if applied, it must be gradual; For example, inform the employer today that in 2025 they will have to contribute 0.5% or 1%.

“I am in favor as long as it is a very gradual measure. It is also not possible to recharge companies a lot and raise the contribution very quickly, which today is 0% for them, because in the end the cost will be paid by the worker. If I am a company and I have to start paying something very big or small for my worker, in the end I am going to deduct it from his salary. In the end they will pass the bill to the worker “commented the specialist.

From multi-funds to generational funds

In addition to how much pensioners should receive in the future, it also evaluates how to invest members’ money to generate greater profitability. Congresswoman Rosio Torres (Alliance for Progress) pointed out that in countries like the United Kingdom and Mexico, they opted for the change from multi-funds to generational funds. What would be the best option for Peruvian affiliates?

“It is a good policy. In fact, the Chilean reform of President Boric is promoting this change from multi-funds to generational funds. Because the investment that has to be made for the capital of a person who is just retiring is not the same as the capital of a young person who has just started his working life. They are different investment policies, but I think we should study the possibility of switching to generational funds,” said Bernal.

Debate needs to be balanced

Focus.Javier Olivera, Economist

It is striking that so much room is given to the proposals of the AFPs because they clearly have a conflict of interest. That is, they are there to win, to make a profit.

For example, seed capital is a lousy policy. What the AFPs are telling the government is “stop doing your social policy with Pensión 65 and we’ll invest the money and we’ll do it from now on.” They also put a lot of emphasis on the IGV issue. What they are proposing is that people with higher incomes benefit more from these discounts. And, on the other hand, they take tax resources from the State to implement social policies. These types of proposals must always be carefully analyzed, unfortunately sometimes congressmen do not realize where the trap is.

Experts who have different points of view should be summoned to enrich the debate, but who do not have a conflict of interest. It is good that pensioners or affiliates participate, but they also have their own interests.