Tax reform is progressive and seeks a more equitable collection, according to international experts

This week, international experts presented to the technical team of the Ministry of Economy and Finance (MEF) their evaluation of the request for legislative powers in tax matters presented by the Executive Power to the Congress of the republic.

The conclusion is that the proposed measures aim to improve the progressiveness of the Peruvian tax system as the tax burden on the poorest quintiles decreases and increases it only for those with the highest incomes. In the case of earned income, the reforms proposed by the MEF reach only 0.25% of the population with the highest income, while in the case of capital income, the measures presented as part of the request for powers reached only the 1% of higher income.

In this way, the tax reform would improve the fairness of the tax system while increasing collection and broadening the tax base. This is thanks to the fact that the set of measures presented by the MEF also aims – and mainly – to combat tax evasion and avoidance and to promote the formalization of tax Mypes and the economy in general.

It is important to indicate that, according to the results of the last World Inequity Report 2022, Peru is among the most unequal countries in the region and in the world. For that reason, the report recommends promoting reforms that aim at more progressive and equitable tax schemes, and that raise income to invest in education, health and ecological transition.

In this sense, it should be remembered that last week the International Monetary Fund (IMF) also presented a report on tax reform. And that with regard to the mining tax regime, he concluded that there is room to increase its progressiveness without affecting the competitiveness of the sector.

According to MEF estimates, from April 2020 to September of this year, mining companies have received extraordinary income of around US $ 13,670 million only due to the effect of the increase in mineral prices. For this reason, the proposed reform aims to capture a greater part of the extraordinary income that large companies, mostly transnationals, are obtaining due to the higher international prices of minerals.