The controversial tax reform in Peru: analysis of Rosangella Barbarán's tax deduction proposal

Tax reform, a fundamental pillar in the economic stability of any country, has become a topic of debate and concern in Peru, particularly with the proposal presented by congresswoman Rosangella Barbarán. This initiative, which aims to grant various tax deductions for income tax, has sparked criticism and fears among experts and economic analysts. Since the 1990s, tax reform has been a key element in the economic development of the country. The simplification of taxes and neutrality in taxation have been fundamental pillars for the sustained growth of the Peruvian economy in recent decades. However, Barbarán's proposal represents a setback in this direction by introducing deductions that could promote tax evasion and distort the market. Tax neutrality is essential to ensure that taxes are applied equitably and do not distort the economic decisions of agents. When the tax system artificially benefits certain goods or services through deductions, distortions are generated that can lead to an inefficient allocation of resources. Instead of being directed where they are most needed, resources are diverted to activities that receive tax benefits. The proposal for tax deductions presented by congresswoman Barbarán poses a significant risk in terms of tax evasion. The possibility of disguising common purchases as deductible expenses could open the door to fraudulent practices that would harm state revenue. The lack of clarity in the criteria for determining which expenses are eligible for deduction could lead to lax interpretations that facilitate tax evasion. One of the critical points of the proposal is its potential regressiveness. By mainly favoring taxpayers with higher incomes, tax deductions could exacerbate inequalities in income distribution. While those with greater resources would benefit significantly, lower-income taxpayers would not see a positive impact on their tax burden, which could deepen social and economic gaps in the country. Concerns about the adverse effects that could result from the implementation of these tax deductions have sparked a debate in the public opinion and among economic specialists. The need to promote a fair, equitable, and efficient tax system is a consensus in the academic community and among economic actors. Therefore, it is essential to carefully analyze the implications of this proposal before its approval. Tax evasion is a chronic problem in Peru that has negatively impacted revenue and the equity of the tax system. The introduction of measures that could incentivize evasive practices instead of combating them represents a setback in efforts to strengthen the formalization of the economy and ensure the sustainability of public finances. It is crucial that any tax reform be based on principles of equity, transparency, and efficiency to ensure sustainable and equitable economic development. In conclusion, the proposal for tax deductions presented by congresswoman Rosangella Barbarán poses significant challenges in terms of tax neutrality, tax evasion, and equity in the tax system. It is essential for authorities and legislators to carefully evaluate the potential impacts of this initiative and consider alternatives that promote a fair and efficient tax system that benefits the entire Peruvian society.