EspañolChilean President Michelle Bachelet is taking steps to achieve the reforms promised during her election campaign. One of Bachelet’s flagship proposals, tax reform, has now made its way through Congress.
On Wednesday evening, after three legislative sessions, the Chamber of Deputies passed the law, which could take effect before September 30.
The new law includes changes to the income tax, new incentives for savings and investment, so-called corrective taxes, and a set of measures to fight tax evasion. The new legislation also increases the corporate income tax rate from 20 to 27 percent.
These changes are expected to earn the Chilean government more than US$8 billion in revenue, which will be allocated to fund Bachelet’s promised education reform.
“Chile can now celebrate, because we are sending signals of stability and certainty to the market at a time when we need more than ever to push in the same direction,” stated Alberto Arenas, minister of Economy, after the law was passed.
According to Chilean government, this tax reform is meant to promote equity, profoundly changing a Chilean tax system that has been in place since the early 1990s.
Axel Kaiser, chairman of Chile’s Foundation for Progress, has warned about the potential impact of this new law. “When you threaten to change a whole economic system that has been working for the last three decades, and has positioned Chile as leader country in Latin America, a huge degree of uncertainty is created,” he said. “This will freeze investment.”