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Boric presents the tax reform with which he seeks to finance half of his government program

2022-07-02T00:15:46.489Z


The initiative, which will be discussed in Parliament, aims to raise 4.1% of GDP: 12,000 million dollars


The president of Chile, Gabriel Boric, this Friday during the presentation of the tax reform. HANDOUT (REUTERS)

The Minister of Finance of the Government of Gabriel Boric, the socialist Mario Marcel, announced this Friday the long-awaited tax reform of the leftist Administration, a fundamental piece to finance about half of an ambitious program.

The reform detailed today in La Moneda by the economist and the president himself seeks to collect 4.1% of GDP in four years, that is, about 12,000 million dollars.

Marcel, who has done important work before the reform enters Congress on Monday, spoke of gradualism, along with announcing the main tools with which they hope to achieve greater tax collection.

At a time of a complex economic situation, with high inflation and risk of recession next year,

"The tax reform that we present today together with Minister Marcel seeks greater equity and social cohesion based on a new fiscal pact that will allow us to advance in social rights together with a good use of our resources," explained President Boric.

For the minister, “it responds to the idea of ​​a fiscal pact that contributes to the development of the country, that helps to modernize the tax system, that gives more justice to the system and that is efficient both in the collection and in the use of resources. ”.

He gave convening signals: "It is not only a tax reform of this Government, but a fiscal pact that more than separate the country between good and bad, which seeks to support the development of the country on the basis of a dialogue and broader agreements" , added the economist, who even before entering the Government presided over the Central Bank.

The reform contemplates a tax increase for 3% of people, those with the highest income, with the aim of greater tax justice.

It will affect salaries over four million Chilean pesos, that is, higher than 4,300 dollars.

Meanwhile, the corporate tax will drop from 27% to 25%, to encourage investment in actions that increase the productivity of companies and the economy (although the cut would only become effective if the company shows that it has allocated 2% to a "productive" investment).

In parallel, the new wealth tax will tax 6,300 people and contemplates a rate of 1% on wealth over five million dollars and 1.8% for wealth over 14,500 million dollars.

The proposal detailed by Marcel also modifies the

royalty

to mining, specifically the taxation of large-scale copper mining, that is, the one that produces 50,000 metric tons of fine copper annually.

Along with tax discounts focused on the middle classes and the end of some exemptions, Boric's reform includes plans to prevent tax evasion and avoidance and to improve auditing.

The initiative will be divided into four bills and two of them will enter Congress in July.

Although in recent days there has been a heated debate among economists about Chile's place with respect to the world in its tax burden, Minister Marcel assured that the country is eight points of the product below the average of the OECD countries.

The leader of one of the main business associations, Juan Sutil, of the Confederation for Production and Commerce (CPC), assured that "regardless of whether there may be things that are good, others that need to be fixed, others that need to be improved, the uncertainty decreases, because at least you already know perfectly what the government's proposal is doing”.

Meanwhile, the political opposition to Boric has focused its criticism on the economic moment that the country is going through and the absence of measures that focus on increasing investment and economic growth, in a context of high inflation (11.5% in the last 12 months).

For mining companies, meanwhile, it is "complicated to apply such an ambitious plan in a scenario of high inflation and signs of economic recession," as stated by the president of the National Mining Society (SONAMI),

The political track where the tax reform lands is not clear.

The president has fallen sharply in popularity.

According to the latest Cadem survey, for example, only 34% approve of his management, the lowest percentage since he took office in March, while 59% disapprove.

Meanwhile, the fate of the constitutional text that the convention will present to the country on Monday seems tied to the fate of the government.

According to the same opinion study, the option of those who approve it falls back to 33%, while the alternative of those who reject it reaches 51%, that is, 18 points higher.

Source: elparis

All news articles on 2022-07-02

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