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MEF: “Tax exemptions only benefited higher income taxpayers”

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The Vice Minister of Economy, Alex Contrerasargued that the creation of tax benefits limits budget resources and their effects in favor of society are well below the fiscal costs.

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During his presentation before the Budget and General Account Commission of the Republic, the official referred that, for 2023, a potential tax expense of S/ 20,354 million is estimated, higher by around S/ 2,700 million than estimated for 2022 .

For Contreras, this type of tax expenditure translates, in practice, into tax exemptions that have not met their objectives in favor of the population and only favored higher income taxpayers at the time.

“These waivers have already been shown to fail and are costly. They could be reformulated, as has been done, to try to make this smaller provision of the budget much more efficient and effective”, he stated.

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As recalled, in April 2022 the Plenary approved to exempt basic products from VAT, in an unsuccessful attempt to lower the prices of chicken, eggs, milk and wheat flour. The exoneration of the ISC to petroleum derivatives of the Executive was also addressed by Congress to reach more fuels.

The last reduction promoted by the Peruvian Government was the reduction from 18% to 8% of the VAT for hotels and restaurants until 2024, an “unwise” measure in the opinion of the owner of the statement, Kurt Burneo.

“The evidence is overwhelming, they do not meet their objectives. The fact that exonerations continue to be approved limits budget capacity, ”he added.

Instead, the deputy minister of the MEF highlighted the advance of tax pressure in recent years, even when the pandemic could interfere with the collection of resources, for which he demanded a better treatment of this type of cuts, in order not to hinder this evolution.

“There has been a structural change in the collection capacity. Perhaps 16% is low compared to the average for Latin America, but if we compare ourselves to what we had before the pandemic, which even reached 13% in 2017, there has been significant progress,” he stressed.

Source: Larepublica

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