Alex Contreras: “What would be lost without changes to the mining tax scheme is around S / 1,200 million”

The Commissions of Constitution and Economy will elaborate a prediction to grant tax powers to the Government. However, many proposals from the Executive are not being considered. In this regard, the Vice Minister of Economy explains the impact that not implementing all the proposed tax reform could generate.

How much could be stopped collecting if changes are not made to the mining tax regime and other taxes?

What would be lost by the mining tax scheme is around S / 1,200 million, that will depend on the final definition and what we could lose by first and second category rents, we are talking about S / 3,000 million; These two components are the main components of this reform together with the simplification of the tax regime. That is why it is extremely important to us that these three issues can be approved. Simplification, due to its implications in terms of reducing informality, incentives to declare costs and the mining tax regime, first and second category rents because they allow the generation of more income and converge to a much fairer system.

The rental tax would be progressive. Is it going to be combined with income from work or what would be the mechanism?

Yes, that is probably the mechanism, we are still defining, that is why we want to close the final proposal.

It was said that those who earn more than S / 300,000 would have their taxes raised. What rate would it be?

We calculate a maximum estimate of 5%, it is a marginal section that would be due to the excess. That is, someone who earns more than S / 300,000, for the marginal would pay 5% extra, more or less S / 300,000 are like S / 25,000 per month, so if he earned S / 26,000 he would pay S / 50 per month, if analyzed it is quite a small amount.

How many does it affect?

Basically that impacts 0.4% of the population. We are talking about 8 million natural persons who pay income tax, more or less 34,000 people declare income higher than S / 300,000. It is a limited increase, 5% of the excess is in line with what is paid in other countries and with the recommendations of international organizations. This crisis of the COVID-19 It has amplified inequalities, it has set us back ten years in terms of poverty, it has accelerated inequality, So the only way to make an effective State policy is to use these taxes to close gaps, generate conditions for a rapid recovery of the economy, financing ourselves with a segment that has not been or has been marginally affected, which is high-income people. which are those who can work virtually, which have a series of advantages compared to the average population, we are talking about a group of 34,000 people out of 8 million.

They will have a meeting with the Constitution and Economy commissions. Do you think you will be able to persuade them to grant you the powers on all points?

More than persuading, we want to convince you of the importance of these measures, it does not make sense to approve a tax reform That reduces 90% of income or 55%. These revenues will go to where Peru currently needs and that is what we aspire to convince them, to bet on formality. (…) This is a different reform that is going to expand rates to a small segment of the population, but we are doing it in a technical, correct way, with changes that are not abrupt or anti-technical increases, It is a proposal to build a more progressive, fair, less unequal tax regime and with the objective of making structural changes in the country.In the case of the mining tax regime, there has been talk of social conflict, which is not the best time, but it must be remembered that apart from those structural problems that already have a long history in the country, we are in a period of price boom of commodities, at historically high levels that we have not observed and any delay in any decision in the end will be lower income for one of the countries hardest hit by the pandemic.

Moving on to other topics and being already in December, how much would it grow this year?

We are definitely going to grow more than 13%, a few more decimals or that, but that is what we already have as data, we still hope the PBI October to have the final number. In terms of employment also, we will probably reach pre-pandemic levels by the end of December.

What about formal employment?

We estimate that for the first quarter, but we are waiting for the latest data with the information for October to see this recovery in employment, but if we see the mobility or economic activity indicators we are in a good situation. Peru is going to be one of the few countries in the region to regain pre-pandemic levels in just one year despite the huge drop we suffered last year, one of the worst drop in the world. Now we are seeing one of the largest recoveries in the world and perhaps we will lead the growth of Latin America because we are competing with Chile. And that is not just a rebound effect, as has been said, but is the result of a monetary, fiscal, expansionary policy, a boost to spending and an improvement in the vaccination plan.

Regarding the S / 210 bonus, when will the payment to private sector workers begin?

The payment of the S / 210 bond should be around mid-December, in one or two weeks it will begin to pay the private sector, the operating regulations came out recently, now the resources will come out to validate the register . Once those previous steps are validated, the payment will be very fast because many of those workers, being on the payroll, already have their account.

The Midagri said that the restitution of the price band is being coordinated with the MEF. When could it be approved?

There is a proposal that we are coordinating, we are waiting to have the final version so that it can be released. I estimate that it should be for this year.

What products would they be?

That is precisely what we are defining, right now there is a technical proposal that we are evaluating, there is corn, milk, so we have to agree on a proposal that helps and does not have an impact in the short term on inflation issues, a proposal that is quite technique. There is the rice too. We hope to close the proposal and with that to be able to publish it, I estimate that before the end of the year.