Peru’s government will present a bill to raise taxes on corporate profits in order to lower sales taxes and boost the economy, Finance Minister Alfredo Thorne said on Wednesday.
The initiative is part of a package of measures that newly sworn-in President Pedro Pablo Kuczynski’s government plans to propose to an opposition-dominated Congress.
Taxes on corporate profit are currently at 27 percent in the minerals producer and, according to a law signed by former President Ollanta Humala, should fall gradually to 26 percent in 2019.
In 2014, the corporate income tax rate was 30 percent.
“We are asking … to increase the income tax,” Thorne told reporters after a Cabinet meeting.
He said the increased revenue could finance part of a one percentage-point cut in sales taxes in 2017, another measure Kuczynski’s government will propose. That tax is currently 18 percent.
Kuczynski, a centrist 77-year-old former investment banker who took office earlier this month, says lower sales taxes are central to his plans to modernize Peru by encouraging small businesses to pay taxes. But lawmakers with the right-wing party of his defeated rival, Keiko Fujimori, have slammed the reform as a drain on government revenues.
Thorne also said the measures would help increase the number of tax contributors by bringing small companies into the formal economy.
“The richest pay more, and that way we reduce taxes on the middle class,” he said.
“We are going to make it so that the economy grows based on an increase in consumption and investment in small and medium-sized companies,” he said.
