Popular Force promotes tax deduction that favors its congressmen

Without having an analysis of the economic impact – there is talk of S/1,400 million – nor taking into account the technical opinion of the Ministry of Economy and Finance (MEF), the Congressional Economy and Finance Commission approved bill 6331/2023 -CR, which modifies the single ordered text of the Income Tax Law and expands the threshold of deductible expenses for fourth and fifth category income.

Congresswoman Rosangella Barbarán’s project modifies article 46 of the Single Ordered Text (YOUR) of the aforementioned law, approved by supreme decree 179-2004-EF, in order to incorporate within the deductible expenses of fourth and fifth category income the concepts of own expenses on education and those of children, as well as expenses health of the spouse and children.

Also Expenses for interest on mortgage loans or interest on loans for the construction or acquisition of a first home are included.expenses for the acquisition of food, expenses for food for alimony children determined by a final judicial resolution or conciliation agreement, expenses for purchases of air or land tickets to the interior of the country and expenses for veterinary services.

The working group rejected the MEF’s opinion because it arrived almost against time, despite the fact that it was sent up to three invitations. However, it is also true that the proposal was sent to the members of the commission less than 24 hours before.

The deductible expense for taxpayers will be between 30% and 70%. The objective of the law, according to its authors, is to help the “middle class of Peru,” which they claim occupies the majority of the population. For example, in the case of the tax deduction for education for children, the benefit goes until the student is 22 years old, unless you pay it yourself.

“Here, there are several congressmen at the table—to give a close example—who are paying for a master’s degree or diploma, and I believe they should pay less taxes because they are making an investment not only personal, but for the good of the country,” highlighted Congresswoman Barbarán.

Exemptions on demand

The tributary Miguel Carrillo sees greater discretion applied to health, education and housing as positive, but finds it negative that it also seeks to pass personal expenses as expenses linked to the economic activity, such as food, travel and veterinarians. The deduction for food judgment is also not clear.

“Give a tax shield to make Passing forced food as an expense is not an ideal message”says Carrillo.

Luis Alberto Durán, professor of Tax Law at the PUCP, ruled out that the PL could reduce informality or reactivate the economy at times when the population requires resources – modifications would apply for the year 2025 and would be effective in 2026 -, and also because it remains the deduction limit of up to 3 UIT for this type of expenses.

“This shows the lack of technical rigor with which it has been handled,” says the specialist.

Greater pressure on collection

After approving the PL of Fuerza Popular, the Economy Commission also sent to the Plenary an “exceptional regime of incentives for the prompt payment of tax debts” maintained by micro and small businesses with the Sunat.

In the last four years, Congress approved 101 regulations with a cost of S/86,000 million (more than 8% of GDP), according to calculations by the Fiscal Council.

Data

• Income. The accumulated collection until April shows a loss of -6.3% annually.
• Decline. In 2023, the central government’s tax revenues totaled S/147,246 million, a drop of 6.7% compared to 2022.