[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-108213-en":3,"doc-seo-108213-105":30,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":21,"is_downloadable":21,"audit_status":21,"page_count":22,"language":23,"language_code":24,"site_id":25,"html_lang":24,"table_of_contents":26,"faqs":27,"seo_title":13,"seo_description":14,"update_tm":28,"read_time":29},108213,962075006959,"Anda","https://ap-avatar.wpscdn.com/avatar/e0002397efbe92a78e?_k=1776741047341049297",8,"Research & Report","The Distributional Effects of the Tax and Transfer System - Chapter 3 - Tax Revenues and Expenditure Aggregates","Key messages explain how Peru’s tax and transfer system reduces poverty and inequality through redistribution, while noting limited fiscal redistributive capacity. The text describes how COVID-19 stimulus and cash transfers buffered losses in labor incomes, preventing worse poverty outcomes. It attributes weaker redistribution to a narrow tax base, high informality, low collection efficiency, and regressive indirect taxes plus income-exemptions benefiting higher-income groups. It also outlines the evolution of revenue-to-GDP and emphasizes low tax revenues relative to peers.","Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized  \nKEY  \nMESSAGES  \nTHE DISTRIBUTIONAL EFFECTS OF THE TAX AND TRANSFER SYSTEM  \nThe long-lasting impacts of COVID-19  3  \n• The tax and transfer system plays a key role in reducing poverty and inequality by redistributing the benefits of economic growth among the poorest and most vulnerable.  \n• Solid macroeconomic fundamentals allowed Peru to implement one of the largest stimulus packages in the region against Covid-19 and to observe a strong recovery of public financesin 2021. Cash transfers for the poor and vulnerable partially served as a buffer against the reduction in labor incomes, and, in the absence of a government response, the impact of the pandemic on poverty would have been more devastating.  \n• Fiscal policy has a limited redistributive capacity in Peru relative to other upper-middleincome countries.  \n• Tax revenues remain below potential due to the narrow tax base, high levels of informality, and low efficiency in tax collection. Moreover, high dependence on indirect taxes, which are regressive, and tax exemptions that benefit those in the upper level of the income distribution also explain the limited redistributive capacity on the revenue side.  \n•  \nAlthough all public transfers are clearly progressive, they suffer from leakages to the higher end of the income distribution, which reduces their overall impact on inequality. Fiscal resources and policies should be carefully directed toward greater benefits to those people most in need.  \n• To improve the redistribution of the benefits of economic growth among the poorest and most vulnerable, a package of complementary reforms should be adopted.  \n4  The distributional effects of the tax and transfer system  \n3.1. The fiscal system in peru: revenue and expenditure aggregates  \n3.1.1 Tax revenues  \nOver the two decades previous totheCOVID-19 crisis, tax revenues as a proportion of gross domestic product (GDP) in Peru experienceda modest increase despite reforms that supported a process of economic growth.  \nGeneral government revenue did increase by a factor of 4.6 in the years beginning in 2000 in nominal terms, but, as a share of GDP, it only grew from 18.9 percent in 2000 to 19.6 percent in 2019, before the COVID-19 pandemic 1 The share also did not change much between 2017 and 2019 despite several reforms to the tax system aimed at combating noncompliance and expand the tax base (Figure 1) . Thus, Peru’s tax revenues remain relatively low compared with countries ata similar level of GDP per capita and similar tax rates, such as Peru’s peers in the Pacific Alliance (Figure 2) .2  \nSolid macroeconomic fundamentals allowed Peru to implement against Covid-19 one of the largest stimulus packages in the region and to observe a strong recovery of public finances in 2021. In 2020, general government revenues decreased to 17.8 percent of GDP, but low fiscal deficits and public debt before the pandemic allowed the country to adopt an unprecedent stimulus package against Covid-19. Between March 2020 and September 2021, Peru implemented one the largest economic plans in the region, amounting to 21.6 percent  \nof GDP. In 2021, general government revenues reached 21 percent of GDP due to the recovery of activity economy, including a favorable price cycle in export minerals and the collection of extraordinary revenues (Figure 1) . The country stood out as the fourth registering the greatest deficit reduction in 2021 (from 8.9 in 2020 to 2.5 percent in 2021) and, according to the Ministry of Economy and Finance (MEF), was one of the first to approve short-term fiscal rules after the pandemic.  \nFigure 1. General government revenue, 2000–21 % of GDP  \n25  \n20  \n15  \n10  \n5  \n0  \n2000  \n2001  \n2002  \n2003  \n2004  \n2005  \n2006  \n2007  \n2008  \n2009  \n2010  \n2011  \n2012  \n2013  \n2014  \n2015  \n2016  \n2017  \n2018  \n2019  \n2020  \n2021  \nSource: BCRP.  \nFigure 2. Latin ","cbCaiggmT8i6cWWv","https://ap.wps.com/l/cbCaiggmT8i6cWWv","pdf",3357403,4,1,31,"English","en",105,"# Key Messages\n## The tax and transfer system’s redistributive role\n## The fiscal system in Peru: revenue and expenditure aggregates\n### Tax revenues\n## Macroeconomic context around COVID-19\n## Indirect taxes and the tax revenue structure","[{\"question\":\"How does Peru’s tax and transfer system affect poverty and inequality?\",\"answer\":\"It reduces poverty and inequality by redistributing the benefits of economic growth toward the poorest and most vulnerable. Transfers are progressive overall, but leakages to higher-income groups reduce impact.\"},{\"question\":\"What role did fiscal policy play during COVID-19 in Peru?\",\"answer\":\"Macroeconomic fundamentals enabled Peru to implement a large stimulus package. Cash transfers partially buffered reductions in labor incomes, helping prevent a more severe deterioration in poverty outcomes.\"},{\"question\":\"Why is Peru’s redistributive capacity limited on the revenue side?\",\"answer\":\"Tax revenues remain below potential due to a narrow tax base, high informality, and low collection efficiency. Dependence on regressive indirect taxes and exemptions benefiting higher-income groups further weaken redistribution.\"}]",1784469554,78,{"code":4,"msg":31,"data":32},"ok",{"site_id":25,"language":24,"slug":33,"title":13,"keywords":34,"description":14,"schema_data":35,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":28},"the-distributional-effects-of-the-tax-and-transfer-system-chapter-3-tax-revenues-and-expenditure-aggregates","",{"@graph":36,"@context":85},[37,53,68],{"@type":38,"itemListElement":39},"BreadcrumbList",[40,44,48,51],{"item":41,"name":42,"@type":43,"position":21},"https://docshare.wps.com","Home","ListItem",{"item":45,"name":46,"@type":43,"position":47},"https://docshare.wps.com/document/","Document",2,{"item":49,"name":12,"@type":43,"position":50},"https://docshare.wps.com/document/research-report/",3,{"item":52,"name":13,"@type":43,"position":20},"https://docshare.wps.com/document/the-distributional-effects-of-the-tax-and-transfer-system-chapter-3-tax-revenues-and-expenditure-aggregates/108213/",{"url":52,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":24,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":41,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-30","2026-07-19",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"How does Peru’s tax and transfer system affect poverty and inequality?","Question",{"text":75,"@type":76},"It reduces poverty and inequality by redistributing the benefits of economic growth toward the poorest and most vulnerable. Transfers are progressive overall, but leakages to higher-income groups reduce impact.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"What role did fiscal policy play during COVID-19 in Peru?",{"text":80,"@type":76},"Macroeconomic fundamentals enabled Peru to implement a large stimulus package. Cash transfers partially buffered reductions in labor incomes, helping prevent a more severe deterioration in poverty outcomes.",{"name":82,"@type":73,"acceptedAnswer":83},"Why is Peru’s redistributive capacity limited on the revenue side?",{"text":84,"@type":76},"Tax revenues remain below potential due to a narrow tax base, high informality, and low collection efficiency. 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