They see limited room to generate revenue from the anti-avoidance rule and the fight against informality.
Read the article in El Mercurio.
Following yesterday’s presentation by the Autonomous Fiscal Council (CFA), which warned about the uncertainty surrounding the expected revenues from the tax compliance law to finance pension reform, experts reinforced their doubts regarding the revenue target of 1.5% of GDP expected from this initiative.
“A relevant aspect is that the CFA mentions that the main source of revenue is the tax compliance law, whose tax collection, based on a report by Michel Jorratt, has been widely questioned, raising serious concerns about future financing,” warned economist and director of Hermann Consultores, Jorge Hermann.
The president of the tax commission of the College of Accountants, Juan Alberto Pizarro, also expressed skepticism regarding the goal of achieving 1.5% of GDP through the anti-evasion law. “Doubts about the revenue from the tax compliance law still persist. On the one hand, there is no international experience guaranteeing that administrative measures against evasion can generate 1.5% of GDP,” says Pizarro, who recalls that “the IMF itself was critical of this point and indicated that it would not collect more than 0.5% of GDP (one-third of what was projected).”
The expert also noted that “it should also be considered that the original idea of the law underwent significant adjustments; however, the revenue target was not adjusted.” Pizarro warns that “additionally, the revenue target was set without an official, consensus-based study of evasion that would allow for assessing the effectiveness of the proposed measures against evasion that underpin the expected increase in fiscal revenue.” He also recalls that the SII’s final report on evasion “has not yet been published to date.”
In the same vein, Javier Jaque, partner at CCL Auditores Consultores, pointed out that the doubts surrounding the revenue from the anti-evasion law may be linked to lower-than-expected income from capital repatriation and other measures within the reform. “If (revenues from) capital repatriation were lower than expected, the revenue related to the general anti-avoidance rule will likely face the same projection mismatch. The same applies to informality; it is very difficult to tackle, and therefore, overall, it is expected that revenue will not reach the objective initially set with the enactment of the law,” he added.