The executive branch has once again requested powers to legislate on tax matters, causing significant expectation, especially regarding the potential creation of a tax preliminarily named the “Solidarity Tax.” The government team has stated that international standards and constitutional parameters will be followed in its creation; the idea is that those with higher incomes should pay more, they declared.
As a general rule, including a tax in a country’s tax system aims to cover the fiscal treasury, meet budgets, and fulfill state obligations. However, in times of crisis, its inclusion may pursue objectives opposite to its natural rule. Given the lack of precision regarding the operation of this new tax, political analysts point out that it could be a popular measure to counter certain accepted labor flexibility. Some economists add that it is more convenient to finance the crisis with debt rather than creating a tax that could discourage investment.
International Context and Alternatives
According to international standards, and even more so in a document issued by the OECD (Tax Administration Responses to COVID-19: Measures Taken to Support Taxpayers), it is noted that no Tax Administration considers increasing the tax burden as a reactive measure. Instead, the government should use other available legal tools. For example, exploring a second stage of the capital repatriation regime like the one in 2017, which collected approximately S/ 1,136 million—an indication that there may still be undeclared offshore income. Another option is electronically auditing high-net-worth individuals, especially since the Income Tax Law taxes income from Unjustified Wealth Increase, which finds support in current Anti-Avoidance Rules and various information exchange agreements signed by SUNAT.
Final Reflection
Finally, now more than ever, legal certainty and strict respect for constitutional principles will be our best presentation card when the economy reopens. We must not tax income where it does not exist; while taxpayers’ incomes may seem significant, the associated cost of living is also high, which ends up eroding wealth. As the lyrics of a notable song say, everything depends on the color of the lens through which you look.
