A low impact on informality and a risk for the economic reactivation of Peruvians. This is the concern generated in analysts by the tax section of the Request for legislative powers that the Executive Power has sent to Congress.
Although the argument of the Ministry of Economy and Finance (MEF) is that the powers would allow it to strengthen fiscal and tax policy to increase collection, the reality is that the initiative is viewed with skepticism and concern by several analysts, since they are not observed measures aimed at solving one of the main problems: the high level of informality and the evasion and avoidance that this causes.
In this context, of the proposed tax measures, the increase in the minimum royalty of the mining sector and the increase in the Income Tax for rentals are considered negative by Apoyo Consultoría, while others are considered inappropriate.
The latter are the increase in Income Tax (IR) for people with fourth and fifth category incomes, the IR for capital gains, the tax burden for mining and municipal tax policy measures.
In its recent report from the Business Advisory Service (SAE Empresarial), the firm also warns that the initiative to increase taxes would be untimely. “In tax matters, we consider that it is not pertinent because it puts the fragile economic recovery at risk,” says Apoyo, adding later that formal private employment is still lagging behind the levels prior to the pandemic.
For Rocío Liu, tax lawyer and partner of the Damma Legal Advisors firm, The main problem of a tax increase would be the impact on the economic reactivation and recovery of employment.
“The risk is that they propose this at a time when the economy is trying to get out of the pandemic and with a political problem where there is uncertainty and (investment) projects have been stopped. Are they going to add more taxes to that? ”Liu said.
Underlying problem
Regarding the collection problems related to the informality that the country has, Liu warned that this is not addressed by the initiatives of the Executive.
“The risk (of congressional empowerment) is that there is no measure of any kind to address informality or increase the taxpayer base. The proposals that they have presented basically consist of recharging those who already pay taxes and that are formal ”, he specified.
His view coincides with the Apoyo report, which mentions that the problem of low collection is not the tax rates, since the main ones are aligned with the Latin American average, but that this is explained by the high levels of informality and evasion and elusion. “In Peru, 70% of workers work in the informal sector, while in the region it is approximately 50%,” the firm details.
Therefore, the lack of attention to this problem, the lack of an adequate technical team in tax matters in the Executive and the lack of will to debate the initiatives with other economic actors would be reason enough for Congress not to grant legislative powers in tax matters. This is what the tax expert Jorge Picón asserts.
“I do not see a better technical capacity than Congress or any vocation to want to coordinate absolutely with any union. So it would be advisable for the tax reform to be proposed by the Executive, but at the level of the Economic Commission (of Parliament) ”, said Picón. The decision that the legislators will make remains to be seen.
Keep in mind
-Giorgio Balza, principal associate of the Cuatrecasas Study, explains that in other countries the treasury seeks to increase tax pressure, and therefore collection, at all levels. “This implies expanding the tax base; make those who do not pay tax ”, he says.
-Some initiatives could be positive, according to Apoyo, such as the simplification of the Mype Regime, the VAT for the digital economy and speeding up the resolution of tax disputes.
