Partial reform will only allow the collection of 0.20 points of GDP

The Congress of the Republic partially approved the legislative powers in fiscal, financial and economic reactivation matters requested by the Executive at the end of October.

In that sense, The Ministry of Economy and Finance (MEF) reported that the measures supported by the Legislative will manage to collect only 0.20 points of GDP, well below the 1.5 points that were sought to be collected with the tax reform proposal, backed by the International Monetary Fund (IMF).

The MEF calculated that with the full acceptance of the reform package, S / 12,000 million of additional income would be obtained each year; however, with the measures approved in plenary, the figure would only reach S / 1,750 million. Even, according to sources consulted, this last figure would only be collected between 2 to 3 years, when the measures are implemented at 100%.

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What are the main exclusions? In the Executive’s proposal, about 25% of the income came from changes to the mining tax regime. The increase in the tax burden was justified by the rise in commodity prices, which this year reached record figures.

It also sought to raise the Income Tax for individuals who earn more than S / 300,000 a year. In addition, it proposed an increase in the rental tax and capital income.

Along these lines, the president of the Constitution Commission, Patricia JuarezHe pointed out that it was not necessary to grant the powers in mining because of the social conflicts in the sector.

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“We call on the Minister of Economy to immediately present his bills that we we are ready to debate quickly so that it can be approved in order to obtain more resources ”, he declared in plenary session.

Time to make reforms

Jose Oscátegui, Professor of Economics at the PUCP, pointed out that this was the time to implement the reforms proposed by the Executive, mainly because the Government inherited a management without public funds and greater debts due to the COVID-19 pandemic.

“The tax reform had to happen because for several years the IMF is advising that Peru process a reform because the resources it obtains from the tax burden are one of the lowest in Latin America”, Indicated the economist.

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In addition, he added that the parliamentarians who oppose the measure have a wrong conception about the relationship between fiscal spending and private investment.

Faculties will be for 90 days

The Government requested a period of 120 days; However, Congress gave it only 90 days to legislate on economic and tax management, as well as in the fight against tax evasion and avoidance, to contribute to closing priority social gaps to achieve the well-being of the population.

Reactions

Patricia Juárez, Constitution Commission

“Currently we are going through problems of social conflict, especially in mining, it is not necessary to deliver them (powers to make changes to the mining regime) ”.

José Oscátegui, economist

“The tax reform had to happen, this is not a request that arose out of nowhere, but rather from the recommendations of the International Monetary Fund based on the tax burden ”.

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Tax collection between the MEF proposal and what was approved by Congress