President Gabriel Boric reiterated in his speech the importance of the State being able to collect more. Adriana Thomasa (EFE)
In July, the government of Gabriel Boric will insist on its tax reform in the Senate. This was announced in his second Public Account, in which he repeatedly referred to this bill, whose idea of legislating was rejected on March 8 in the Chamber of Deputies. The resources that would be raised by this initiative – 3.6% of GDP, about 10,000 million dollars – are key for the current leftist administration to finance the different commitments acquired with citizens.
The measures highlighted in his speech that need greater fiscal resources to materialize are multiple. Among them, the right to a nursery that, according to the president, will be for both men and women to advance in co-responsibility. Also, the reduction in 40% of waiting times for surgeries, the historical debt of teachers, the largest budget for security, in addition to the bill to create a National Care System and the one that seeks to alleviate the educational debt generated by the Credit with State Guarantee mechanism, known as CAE, which according to preliminary calculations amounts to about 7,000 million dollars. "Neither this government nor any other will be able to advance responsibly in materializing these rights if it is not with a tax reform," the president said near the end of his speech, where he reiterated the importance of ceding positions and reaching agreements.
He was seconded by Michelle Bachelet, the only former president present today in Congress: "We must, once and for all, get a tax reform that allows improving pensions," said the socialist at the end of the Public Account. "It's key that we stop thinking about small politics, that we think about what people need and that there is a big deal for tax reform."
In economic matters, the president referred to the problem of inflation generated by the massive liquidity injections of 2021 that overheated the Chilean economy, which was aggravated by the war between Ukraine and Russia. In that sense, he highlighted the support provided by the State to take care of the increasing cost of living, such as the reduction of the price of paraffin, the 15% increase in the amount of the food scholarship for higher education, the winter bonus that benefited more than 7 million people, the 20% increase to the Single Family Subsidy and the reduction of the price of medicines for users of Fonasa, the state health insurer.
But he also announced that during June an additional contribution will be made to the Winter Bond, state guarantees will be offered to support middle-class people to renegotiate their debts with banks and some 62 million dollars will be invested to encourage the creation of new jobs. "These measures will also help support the reactivation of the economy," explained the Chilean president, just on the day that the Central Bank reported that Chile's economic activity in April fell 1.1% in 12 months, which is at the most pessimistic end of analysts' projections.
Likewise, Boric announced that administratively the Government will freeze the winter rate of electricity that punishes overconsumption with a higher price. To this end, he said, "the Ministry of Energy is working with private companies so that this benefit can materialize in customer accounts as soon as possible."
Investment and productivity
Among the goals in economic matters, Boric also raised the need to increase investment and get out of the productive stagnation that has affected the country in the last decade. Since last year, the Government has launched 80 concrete actions as part of the Let's Invest in Chile Plan and the Productivity Agenda. And the balance made by the head of state against these measures was positive: "Thanks to good economic management we ended 2022 better than expected: instead of a 3% drop in investment that was projected at the beginning of 2002, we had an increase of 2.8% and the Gross Domestic Product (GDP) grew by 2.4%, also above projections," he stressed.
For this year, he said that he will insist on the tax incentives for private investment that were part of the tax reform and announced that as a way to eliminate state bureaucracy and reduce uncertainty about new investments, this year all sectoral permits will be digitized and concentrated in a single system. in order to make the processing of permits more efficient. "This is a recurring theme when we talk to entrepreneurs and investors of all sizes," the president said. The president added that during the second semester a law of comprehensive reform to the processing of more than 300 sectoral permits will enter Congress.
To support small and medium-sized enterprises, in 2022 the State mobilized an additional 71 million dollars to the budget to support SMEs in their reactivation, with a focus on women and sectors such as tourism and culture. In addition, he said, it helped to renegotiate debts of more than 85,<> tax debts for the most affected entrepreneurs.
Renewable energies and lithium
In his speech, Boric made special mention of the opportunities that Chile has through two key industries for the future of the planet: lithium and green hydrogen, two elements in which the country has competitive advantages. Based on this issue, he highlighted the National Lithium Strategy, presented at the end of April and which seeks that the State can enter the exploitation of the mineral in the Salar de Atacama, in the north. "It is about agreeing so that today, and not in an uncertain future, the fruits of our land can be a source of benefit and sustainable development for the entire nation," he said.
In terms of green hydrogen, the head of state said that Chile's goal is to become one of the main producers in the world and advanced the drawing up of an Action Plan for the development of this industry, which will have financing for up to 750 million dollars from the Inter-American Development Bank and the World Bank.
As for renewable energies generated through the sun and wind, the president pointed out the importance of having storage networks. To accelerate this transit and achieve carbon neutrality before 2050, the president announced a bill to tender large-scale electric energy storage systems, which will begin operation at the end of 2026 and will be the largest in Latin America, with an investment of 2,000 million dollars.
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