LIMA, Oct 16 (Reuters) - Peru’s government has ruled out cutting taxes or introducing subsidies to encourage investment and cushion export sectors from the worst economic slowdown in five years, the minister responsible for industry said on Thursday.
The government said earlier this year that it was considering introducing new tax reforms, including possibly lowering the corporate tax rate from 30 percent.
But Production Minister Piero Ghezzi said that those kinds of measures would leave the government without the funds it needs to invest in long-term growth projects.
“We outright rule out subsidies or tax cuts,” Ghezzi told reporters after a meeting with the local business community. “If we want to close the gaps in infrastructure and education, we need taxes.”
The government plans to help promising new sectors get off the ground by building needed infrastructure, Ghezzi said.
A global consulting firm will help the government identify which export markets would best help diversify Peru’s mining-dependent economy, he added.
Mining makes up 15 percent of gross domestic product and some 60 percent of export earnings.
Peru’s once-surging economic growth has slowed sharply this year on tumbling mineral exports and weak private investment.
The global producer of copper, gold, silver and zinc is now on track to post an expansion of about 3 percent in 2014.
Ghezzi said incentives to encourage a more diversified economy will not include big tax breaks.
“A substantial reduction in taxes will go nowhere because it will simply create macroeconomic holes for us,” he said. “A highway or a port, those are the types of interventions we want to do.”
Peruvian President Ollanta Humala has announced several reform packages this year designed to jumpstart growth, including looser environmental rules, increased spending on health and security, locked-in tax rates for big mining projects and measures aimed at cutting bureaucracy.
Reporting By Teresa Cespedes; Editing by Alan Crosby