We invite you to read the letter written by our Tax Group Director, Andrea Bobadilla, in which she reflects on the application of the luxury tax.
Dear Editor:
The luxury tax, in force since January 2022, is an example of how a tax policy can end up being more symbolic than effective. According to figures from the General Treasury of the Republic, in more than two and a half years of application, it has barely collected US$11 million during 2023 and US$21 million between January and October of this year. In total, US$33 million, which represents less than a third of the US$119 million projected at the time of its creation, a clear indication that something is not working.
The question is obvious: is it worth maintaining, under the current terms, a tax that collects so little compared to what was promised and, at the same time, discourages the acquisition of goods that already bear a high tax burden? In a weakened economy like ours, maintaining inefficient taxes not only affects certain sectors, but also limits the dynamism of the activities linked to them.
Instead of insisting on formulas that do not meet their objectives, would it not be more reasonable to evaluate alternatives such as raising the thresholds for taxable goods, reducing the tax rate, or simply suspending its application temporarily? Incentives of this kind could, in my opinion, have a more significant effect on the recovery of certain sectors than the modest tax revenue that the tax has proven to generate.
Persisting with a tax that does not collect what it promises and inhibits the specific consumption of certain goods should invite us to reflect on the advisability of maintaining it in its current form. It is time to reevaluate tax policy and consider alternatives that promote economic growth and the reactivation of key sectors.
Letter written by:
Andrea Bobadilla | Director of the Tax Group | abobadilla@az.cl
