Patricio Quintanilla Paulet, rector of U. La Salle
The request of the Executive Power to the Congress of the Republic, to grant delegation of powers for tax matters, has originated a discussion on the subject.
Fiscal policy is the field of economic policy related to state income and expenditures and has two basic objectives: to generate sufficient resources to finance public spending and to improve income distribution in the country.
Tax pressure
An indicator of collection efficiency is the tax pressure, which is the percentage of GDP that taxes represent, in all its forms. In Peru it is of the order of 14%, while in neighboring countries, it is around 20%.
The main cause of this is tax evasion and avoidance, which is partly caused by the informality that prevails in Peru.
The only way to improve tax pressure is to increase collection, broadening the base or applying taxes to the higher income segments of the population, contributing to the fiscal policy objective of improving income distribution.
Executive Proposals
From what can be seen, the Government’s proposals are focused on increasing taxes, both direct and indirect. Among the former, it has been mentioned to increase the rate on First and Second Category income, related to income from rentals or from the sale of real estate and capital income, respectively. In this same group is the income tax of the Fourth and Fifth Category from earned income; currently the rates are progressive, ranging from 8% to 30%.
The proposal is to create an additional tranche, for income greater than S / 300,000 per year, and it should be specified that this possible new rate would be applied on the surpluses of this amount, as it is a progressive tax; As mentioned above, it would contribute to an improvement in the distribution of income, because the resources, if well used, would be destined to the most vulnerable groups of the population.
Regarding indirect taxes, the main proposal is to tax digital services with VAT, such as popular movie platforms, which are included in this tax, but whose collection is very complex, as they are companies resident abroad, but which billed in the country.
conclusion
In a situation of low growth rates, it is convenient to apply an expansive fiscal policy, by increasing public spending or reducing taxes, to the extent that the fiscal box resists it; these measures are contractionary and, therefore, do not contribute to economic growth.
However, the proposal of a higher tax rate for people with higher incomes may be convenient, because it will not seriously affect the consumption of this group of the population.
The great weakness is the absence of proposals to expand the tax base, reducing informality.
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Kingston is an accomplished author and journalist, known for his in-depth and engaging writing on sports. He currently works as a writer at 247 News Agency, where he has established himself as a respected voice in the sports industry.
