Peru’s finmin quits over fuel tax hikes

LIMA: Peruvian Finance Minister David Tuesta resigned on Monday as truck and bus drivers called off plans for a major protest against his fuel tax hikes and the president promised to shift the focus on collecting taxes owed by big companies.

The finance minister’s resignation marks the biggest setback yet for President Martin Vizcarra since he became president in late March to replace Pedro Pablo Kuczynski, a former Wall Street investor who stepped down in a graft scandal.

Tuesta’s decision to hike excise taxes on diesel and other fuels as oil prices climbed on global markets prompted protests in southern Peru last month and organisers had threatened to stage larger and indefinite protests starting on Tuesday. In a late-night televised address, Vizcarra said he had accepted Tuesta’s resignation as part of a shift in tax policy.

“The country’s growth will be obtained on the back of investments and better (tax) collection, not on raising tax rates,” he said. However, Vizcarra did not say whether his government would reverse the higher fuel taxes. Instead, he shifted the focus of his tax drive to large companies.

“Large companies have been identified that owe the state the equivalent of more than 1 percent of GDP, revenues needed for the development of public works and policies that benefit all Peruvians,” Vizcarra said. Vizcarra did not name any of the companies but promised to establish an ad-hoc commission to tackle the issue.

Earlier on Monday, representatives of truck and bus drivers announced they had agreed to call off plans for an indefinite strike against the higher fuel taxes after reaching a deal with officials in Vizcarra’s government. It was not clear if Tuesta’s resignation was part of this deal. The finance ministry was not immediately available for comment.

In neighboring Brazil, a recent truckers’ strike over higher diesel prices virtually paralyzed the country for nearly two weeks. Vizcarra did not say who he would appoint to replace Tuesta, but he is widely expected to keep Peru’s decades-old free-market economic model in place through 2021, when his term ends. Critics warned that Tuesta’s resignation risked sending the message that Vizcarra, formerly the country’s vice president, could be easily swayed.