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IMF mining reform to inject US$ 1,154 million to the treasury in the next 5 years

IMF mining reform to inject US$ 1,154 million to the treasury in the next 5 years

A tax reform on mining in Peru could mean an additional collection of between US$ 853 and US$ 1,154 million in the next five years, according to an estimate made by the Tax Justice Group (GJF) based on the report presented recently by the International Monetary Fund (IMF), which recognizes, on the one hand, the growth forecasts for the demand for minerals in the world, and on the other, the need to renew fiscal schemes to get out of the crisis.

For the former holder of FEM Peter Franke, The IMF’s conclusions anticipate a scenario of greater fiscal pressure on this industry without our country losing competitiveness on the international stage. Thus, the economist refers that the total tax burden, in the order of 37.3%, could rise through different mechanisms and, practically, we are at half of the world average. Chile is a little below if we include the discussion of workers’ profits, but if not, it already has a higher burden than Peru.

In this sense, he regrets that the first advance of the government to take advantage of this copper boom has been lost with the partial granting of powers by Congress, but he rescues the commission left to the Graham administration, to present bills along these lines.

“Prices have increased and we would have wanted the reform we had it before. These taxes are collected quarterly, we already lost the 4Q of 2021, as well as the 1Q and 2Q of this 2022. If the law were approved (for a new tax scheme), at this time it would not be applied until July, in the best of cases. cases. Everything that is IEM (Special Tax on Mining) and royalties is not applied until Q3. Time goes by and money is lost, ”he said.

Precisely, in one of the scenarios glimpsed by the IMF, which increases the IEM rates and the royalty floor by 1 percentage point (up to 2%), in the first five years the collection would go from US$13,480 to US$14,634 million, with prices of copper US$3.35/pound. A “conservative” increase of US$ 1,154 million in five years, according to Francke, since the red metal is trading today above US$ 4.68/pound.

GJF expects that in 2022 about S/ 4,000 million will be collected in addition to those initially budgeted, due to the increase in the prices of minerals and hydrocarbons.

Infographic – The Republic

social factor

According to former Environment Minister Jose de Echave, The Government should take up with greater resolution the initiative of a comprehensive tax reform, especially on the mining issue, but without neglecting the social conflict that may affect the sector. In this sense, he considered that the PCM should have greater capacity to respond to confrontations focused on the south, such as the zone of influence of Cuajone Y The Bambas. However, he ruled out that, despite everything, the companies have stopped receiving excess profits along the mining corridor.

“We must avoid what happened in the previous price supercycle 2003-2012, when changes were made only at the end (2011). Peru lost at least nine years of opportunities to close gaps such as those exposed during the pandemic”, the expert noted.

reactions

Pedro Francke, former Minister of Economy

“In the short term, these resources will be necessary to finance social relief policies. Once this crisis is over, they should be invested as a priority in closing gaps for the most vulnerable.”

José de Echave, CooperAction

“The current political and social context may not create the best climate for a mining reform, but that does not mean that it should not be discussed. I would expect more initiative from the MEF”.

Source: Larepublica

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