Chile: Deputies unanimously approve tax exemption project for the “super rich”

RIO DE JANEIRO, BRAZIL – Amid intense negotiations to reach an agreement, the Chamber of Deputies unanimously approved on Monday, January 10, the bill eliminating tax exemptions to finance the Universal Guaranteed Pension (PGU). However, the government will continue to talk with the teams of the President-elect, Gabriel Boric, deputies, and senators so that the initiative leaves Congress as soon as possible and can begin to be paid during February.

Surprisingly, the initiative was approved unanimously by the 130 deputies present in the Chamber. Even the ruling party contributed, despite having submitted a request for a separate vote for the article that establishes a tax on high net worth individuals, it was later withdrawn.

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After the vote, the Executive presented the reservation of constitutionality on the controversial article since it is an exclusive initiative of the President of the Republic, said the head of the Treasury, Rodrigo Cerda. From now on, the bill will go to the Senate, which will have to analyze it in parallel to the Universal Guaranteed Pension since Cerda reaffirmed that they would not join both initiatives.

However, the head of the RN bench, Leopoldo Pérez, explained that his sector approved the controversial article as “a gesture of will” so as not to hinder the progress of the initiative.

NEGOTIATIONS

Despite what happened, Cerda was at all times willing to negotiate. To the point that he admitted that although he made a reservation on the constitutionality of the wealth tax, this “does not imply” that the government will go to the Constitutional Court because there are still many stages to reach an agreement, he emphasized.

The minister expects that the tax on high patrimony will fall in the Senate, for which he anticipated that there would be a third procedure in the Chamber. The optimism of the head of the fiscal wallet is because, according to him, “we are in a full process of dialogue” not only with the team of the President-elect but also with senators and deputies. And although he did not want to give details, it has been reported that the Executive would be willing to include in the project that eliminates exemptions some proposals of Boric’s program.

Among other measures, it is being analyzed that the investment funds pay taxes as First Category taxpayers; that the contributions for the highest value real estate be calculated based on the commercial and not fiscal appraisal; and to end with some tax benefits for the agreed deposits and the voluntary pension savings (APV). The definitions have not yet been finalized.

And while the negotiations continue to advance, the opposition deputies celebrated the approval of the bill with the support of the ruling party, something emphasized by the head of the PPD bench, Raúl Soto: “Not only did we support the tax on the super-rich, but the government deputies also approved it. Therefore, the Ministers of Finance and Labor are alone in this. The ball is in the Executive’s court”.

THE SENATE HAS THE SAY

From now on, both the processing of the bill creating the PGU and that of exemptions to finance it will be concentrated in the Upper House, where the Labor committee is taking its time with the former.

In fact, in yesterday’s session, representatives of the Pension Advisory Council and the Superintendence of Pensions were heard. And tomorrow, Wednesday, they will continue to listen to presentations. The first of these bodies pointed out in its presentation that the study “concludes that the bill under analysis has a very significant fiscal impact, which permanently commits substantial resources in the future”, and called attention “to the importance of the bill having the necessary sources of financing (which are not explicit in the initiative), to ensure the fiscal sustainability and permanence of these benefits”.

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