Germán Alarco: “If we want quality services, we must increase collection”

Should Congress grant the Executive the powers to legislate on tax matters?

Yes, and we must actively work to improve our collection. This is a first step and does not even bring us closer to the standards of Chile, Colombia, Bolivia, Ecuador or Brazil. It is necessary to influence on the side of direct taxes, it is what is being done. It is necessary to influence the sectors that have higher levels of profitability, where the mining sector, the extractive sector, is located.

Work should be done on the issue of VAT refunds in the case of extractive sectors, as is done in other economies. The Congress It must act with the country in mind and not with the particular interests of those who do not want the tax pressure to rise. If we want quality public services for everyone, we have to raise revenue. That is unavoidable.

The MEF’s proposal is to charge more income tax to those who have incomes greater than S / 300 thousand a year. It would apply to only 0.5% of taxpayers. What do you think?

If we take the source from the OECD, which is the one that standardizes the information on tax collection and spending, we will see that the Peruvian tax pressure is 16.6% of GDP and includes the three levels of government. The average for Latin America is 22.9% and that of the advanced economies, members of the OECD, is 33.8%. We are 6 percentage points below the average for our region.

This reform package would generate an additional S / 12,000 million per year and is between 1.5 and 1.8% of GDP. With these proposals, from my positive viewpoint, the standards of the region are not even reached. AND Regarding the income tax, I do not see any problem in increasing the marginal rate for those who receive more than S / 300 thousand soles a year, it is 0.5% of the population. The universal tendency is to adjust on the income side.

There is much to improve in the income tax …

We have a big gap to improve. In Peru, the personal income tax collects 1.8% of GDP. The Latin American average is 2.1% of GDP and the OECD average is 8%. We have a lot of room to grow. The highest marginal rate in Britain, two years ago, is 50% for those receiving more than £ 200 a year. We have space, that is the route recommended by all international organizations, we must act on the side of direct taxes.

What happens in the countries of the region, in our neighbors, regarding its collection?

In Peru it is 16.6%, Chile 20.7% of GDP, Ecuador 20.1%, Bolivia 24.7% and, if we go to Brazil, 33.1%. We are in a ridiculous situation, in terms of tax collection. And these measures allow us, even if it is, to achieve 1.5% or 1.8% of GDP as additional collection per year.

There is a record price for copper and the MEF considers it necessary to review the mining tax regime. Why is it important to do so at this time, and why apply a special tax to this sector?

Let’s not forget that the owner of natural resources is the nation. And who is the nation? It is us, all Peruvians. It should be remembered that the collection in mining and hydrocarbons in 2007, removing returns and VAT, was 17.8% of the value of its production, in 2018 it was 7.9%, we are talking about that we have lost 10 percentage points . From the mining sector, the SNMPE draws theoretical numbers, they say they pay 50% and this is not the case.