Kuczynski's key reforms in Peru could get snagged in Congress

LIMA (Reuters) - Centrist President-elect Pedro Pablo Kuczynski arguably has one of the best resumes for steering Peru's mining-dependent economy through choppy global headwinds in coming years. A former investment banker and World Bank economist with past stints as a prime minister and mining executive, Kuczynski plans to raise economic growth to 5 percent per year despite the commodities slump that has hit Peru's key mineral exports. But some of Kuczynski's economic proposals might not make it out of a Congress dominated by the party of his run-off rival Keiko Fujimori, who has said little since ruling out any alliance in a sour concession speech last month. Lawmakers-elect with Fujimori's right-wing populist party, Popular Force, which will control 56 percent of seats in the next Congress, say they will likely vote against Kuczynski's plans for lowering sales taxes and giving rebates to big companies that reinvest profits. "I think it's going to be impossible to pass" the tax reforms, said Popular Force lawmaker Freddy Sarmiento, who added he would vote against them because he worries they will widen the budget deficit in favor of big businesses. On the campaign trail, 77-year-old Kuczynski touted the tax reforms as central to his plans for unleashing investments, stimulating consumption and broadening the tax-payer base. Now Kuczynski's team is tweaking the proposals to make them more palatable in the next Congress, which he will address upon taking office on July 28. Tax rebates would apply for companies of any size, said incoming finance minister Alfredo Thorne. The sales tax rate would be lowered by just one percentage point, with further reductions subject to targets. "That should ease their worries somewhat," Thorne said. "I don't think there's disagreement with Popular Force, I think there're campaign wounds." Fujimori, the daughter of imprisoned ex-President Alberto Fujimori, is the only leading political figure in Peru who has not met with Kuczynski following his surprise victory. Despite the distance between the two leaders, both favor a continuation of Peru's free-market economic policies and want to cut red tape and boost infrastructure projects. Betting that their common ground will trump the differences, Kuczynski plans to ask Congress to temporarily grant him powers to legislate economic reforms, a request that Fujimori's lawmakers have said they would evaluate. "Union means everyone must pitch in and at times swallow objections to work together," Kuczynski said at a ceremony last week where he was proclaimed the winner. No one from Fujimori's party attended the event. (Reporting by Mitra Taj; Editing by Dan Grebler)