Peru wants to raise taxes on mining sector, says finance minister

Peru’s finance minister, Pedro Francke with the country’s new president, Pedro Castillo. (Credit: Presidencia Peru)

Peru’s finance minister Pedro Francke said on Sunday that the government wants to increase mining sector taxes by 3 to 4 percentage points, adding that an International Monetary Fund (IMF) study had put the sector’s current tax burden at 41.7%.

The remarks, which came in an interview with a domestic broadcaster on Sunday night, mark the first time that Francke disclosed some of the IMF study’s findings along with details of exactly how much the government wants to raise taxes on miners.

The mining tax reform is the signature proposal of socialist President Pedro Castillo, who came to office in July, and wants to use the extra tax revenue to fund social programmes. Peru is the world’s No. 2 copper producer and mining is a key source of tax revenue.

Castillo’s administration has requested special powers from Congress to amend the tax code, which have yet to be voted on.

The mining industry has opposed the plan, saying they pay enough taxes already and that local governments fail to spend all the tax funds they already receive.

“What the IMF is saying is, look, if Peru is at 41.7% and Chile is at 47.1% … raise (taxes), but not in excess, so that you maintain competitiveness,” Francke said. Chile is the world’s top copper producer.

Francke has yet to make the IMF’s full findings public.

(By Marco Aquino; Editing by Kenneth Maxwell)

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