Santiago de Chile (EFE).- The Chilean Chamber of Deputies on Wednesday generally rejected the ambitious tax reform presented by the Government of Gabriel Boric, one of his campaign promises that sought to collect 3.6% of GDP in four years.
The plenary session of parliamentarians narrowly rejected the initiative as the quorum of 78 votes to move forward was not met, with 73 votes in favor, 71 against and 3 abstentions, with a total of 8 congressmen who did not attend to vote, including several of the pro-government group that supports the government coalition.
In statements to the press after learning of the decision, the Chilean Minister of Finance, Mario Marcel, stressed that it is “very bad news” for pensioners and women, since the ways to finance better conditions are closed.
A vital reform for the Government
The bill, key to financing the Executive’s program, included the restructuring of the income tax, the reduction of tax exemptions, the application of a new mining royalty and corrective taxes that aim to promote the preservation of the environment, as well as other measures of a social nature.
With this result, the project ends its processing and the Executive will not be able to present similar initiatives for a period of one year in the Chamber, although it can insist on advancing through the Senate, where it does not have a majority either, introducing some changes.
“It is a sign first of all of the government’s stubbornness that it is not willing to really sit down and talk; In the Treasury Commission, for a long period there was practically no type of flexibility”, said Juan Antonio Coloma, a representative of the conservative Independent Democratic Union (UDI), shortly after the vote.
“The rejection shows that it is not only from a political sector, it is from who we are from the right and also from the center, since it was necessary to reach a majority that was not achieved, we believe due to the constant stubbornness of the Government of not understanding what it was a bad reform that affected small and medium-sized companies,” he added.
“Victory for the evaders”
“Today the parties further to the right of the political spectrum will celebrate, we have seen that those who evade taxes and advise taxpayers to do so will celebrate, because they will have at least one more year to use the tax avoidance mechanisms,” he said for his part. Marcel.
“We are going to have a celebration of the big capitals, the lobbyists are going to celebrate. We regret that this situation has occurred, we regret having to communicate this bad news to the public, we regret this is giving a reason to celebrate those who should have contributed more to the tax effort and we will re-evaluate this with the President to continue with the Government’s agenda.” added the minister.
Tax collection in Chile accounted for 19.3% of gross domestic product (GDP) in 2020, according to the Organization for Economic Cooperation and Development (OECD), well below the average in Latin America, 21.9%, and of this body itself, 33.5%.
According to his calculations, the reform would force “3% of the population” to pay more taxes in a country with the highest rates of inequality in the OECD.