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Latino Daily News

Friday May 16, 2014

Chilean Lawmakers Raise Corporate Taxes to Fund Social Programs

Chile’s government hailed the passage by the lower house of a tax bill that aims to raise an additional $8.2 billion to fund social programs and a public education overhaul, one of President Michelle Bachelet’s main campaign promises.

“This is a time to celebrate because we’ve taken a very important step toward completing a reform that will help fulfill the country’s dreams, that will guarantee high-quality and free education, that will combat inequality and invest in people,” Finance Minister Alberto Arenas said.

The measure now goes to the Senate, where it is all but certain to pass.

Arenas touted the fact that the lower house approved the bill by a wide margin.

Among other things, the bill calls for gradually increasing the corporate tax rate from a current level of 20 percent to 25 percent in 2017, provides new and increased incentives for saving and investment, and includes a package of measures to combat tax evasion and avoidance.

The bill also includes an article to eliminate a provision established by the 1973-1990 Pinochet dictatorship that allowed corporations to shelter a portion of their profits from tax.

In addition, the legislation would raise taxes on alcoholic drinks and tobacco products, lend greater powers to the country’s internal revenue service and boost the levy on stamps and seals.

The tax hike aims to raise the revenue needed for greater spending on public education and for shoring up the public health care and pension systems, as well as for reducing the structural deficit in keeping with Bachelet’s goal of balancing the budget by 2018.

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