The Uruguayan Fiscal Advisory Council (CFA) –created by law within the framework of the new fiscal institutional framework– and convened by the Ministry of Economy and Finance (MEF), published its evaluation report for 2022 on Wednesday.
In one of his chapters he warned “on risks of possible reversal of the fiscal consolidation process in structural terms”. This given the public announcements of permanent tax reductions of the Personal Income Tax (IRPF) and Social Security Assistance Tax (IASS) by the economic team and the president, Luis Lacalle Pou,
In addition, he indicated that on the side of structural income “there is no improvement” in potential or long-term growth (estimated at 2.1%) “consistent with a higher rate of permanent fiscal expansion.”
This Thursday the director of Economic Policy of the Ministry of Economy and Finance (MEF), Marcela Bensión, reiterated that the tax reduction “It is perfectly compatible with the fiscal rule, with an increase in expenses and with the care of the money of the Uruguayans.”
“This tax cut is already contemplated in the fiscal projections, in the fiscal figures that speak of an effective fiscal deficit of 2.6% of GDP for 2023 and a structural deficit of 2.5% of GDP for 2023, he said in statements to Radio Carve.
And he added that “after three years of compliance with the tax rule and tax estimates” the government “has sufficient credibility so that any measure to reduce taxes or increase spending is taken consistently and in line with what that fiscal rule is,” he added.
On Saturday in an interview with The Observerthe Minister of Economy and Finance, lily arbeleche, He had said that the reduction “is consistent with forward fiscal guidelines.”
“We are doing something that enables us the good conduct we have had. Part of being able to continue giving benefits to people is maintaining that good conduct in fiscal terms, ”she said on that occasion.