The Tax Council (CF) has suggested not using the consumer price index to calculate fiscal liabilities such as the agrarian reform bonds, the commitments of the National Housing Fund (FONAVI), the social debt with public workers, among others.
The entity justified that the way in which the CPI is calculated presents biases that cause the true evolution of prices to be overestimated, so it would not be a good index to update long-standing debts generated before or during periods of high inflation, but that it is reasonable to use it to update debts generated in periods of low and stable inflation.
“To do this, the Consumer Price Index (CPI) of Metropolitan Lima has usually been used, which in Peru is the official measure of inflation. However, the way in which the CPI is calculated (as a chained Laspeyres index) presents biases in the way it is calculated that cause the true evolution of prices to be overestimated. Said overestimation can be of great magnitude when the update period includes times of high inflation, such as those experienced in Peru from the second half of the 1970s to the first years of the 1990s,” the CF said in a statement. In the first moment.
“Therefore, special care should be taken with FONAVI’s debt (generated from 1979) because updating it with the CPI could generate an excessive and technically unjustifiable tax burden for the Public Treasury,” he said.
Along these lines, the Fiscal Council suggested alternative methodologies that could be used to avoid this overestimation, such as the use of a geometric index or the indexing of debts to a foreign currency, a method that was recommended by the Constitutional Court in the case of updating of the agrarian debt.
Source: Larepublica
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