The Board analyzed fiscal projections and evaluated changes proposed by the Executive in light of increased tax revenues from lithium. He appreciated the proposal, but cautioned that the mechanism would not completely eliminate the risk of putting potentially temporary resources into permanent expenses.
As with every quarter, Self-Governing Finance Council (CFA) “Report on evaluation and monitoring of cyclical adjustment calculation of effective income” has been released.
There, he presented an analysis of the data and forecasts presented by the Department of the Budget (Dipres) in its first quarter financial report this year.
As such, the Board will first verify that the methodology and procedures used by Depress to calculate the cyclical adjustment of effective income for 2022-2027 comply with regulations.to the value of the structural parameter of Copper reference price, GDP trend and elasticity based on the Structural Balance (BE) regulation.
Similarly, although the Council specified in a statement, Make sure the government has complied with the double rule on valid data for 2022. This is because the Structural Balance (BE) has reached a certain level. 0.2% surplus of GDP exceeding the targets set by the Ministry of Finance. A deficit of 3.3% of GDP. And at the same time, total debt reached 38% of GDP in 2022, but never exceeded the conservative level of 45% of GDP set by the Treasury.
In the report, the CFA also analyzes the government’s calculations of structural balances projected in the latest IFP. Based on the formula proposed by Depress to cautiously adjust lithium tax revenue,
Lithium income adjustment
On this last point, the group chaired by Jorge Rodríguez appreciates that Dipres proposed revisions to the BE methodology from 2023 onwards at the last IFP. This is to calculate higher lithium tax revenues that are considered permanent.
“This is a step forward in addressing the challenge raised by the CFA that some of that income may be of a temporary nature,” the CFA said.
but, It warns that some important aspects of previous recommendations on this issue have not been considered.
In this sense, the report states that “the board understands that the depress proposal is a preliminary and partial methodology that can be completed before it is formally enacted in the respective BE calculation rules.” is shown.
One of the Board’s prior unapproved recommendations refers to the fact that: Methodological changes to prudently adjust lithium earnings apply globally rather than partially.
In this regard, the CFA said in a document, “Dipless reports that restricted access to tax information for companies operating leases for lithium mining will This means that only healthy adjustments to the rent paid to Corfo can be considered. ”
CFA estimates, based on Corfo figures, account for 66.5% of lithium tax revenue in 2022. The CFA therefore suggests: “While the proposed mechanism would mitigate, it cannot eliminate the risk of potentially committing temporary resources for permanent costs.”
In view of the above, the Board encourages Depress to continue to explore options for obtaining information on all tax revenues from lithium or explore alternative mechanisms to ensure sensible coordination. .
Another recommendation prioritized by the CFA but not considered by the depress refers to the fact that the historical data period for estimating the prudential adjustment threshold is longer than the government’s proposal.
In particular, the Board recommended that consideration be given to: As a sound basis for considering lithium tax revenues from Corfo, we take a moving average of the last 7 to 10 years. Depress, on the other hand, proposed a four-year moving average through 2023 and a five-year moving average from 2024 onwards.
In this regard, the Board indicated that this action would have a material impact on the size of the prudential adjustment, and that given the many years before the high ore price period, the more years considered, the more prudential. Simulations are presented in which the adjustment is large. .
Source: Biobiochile
