Chilean government unveils tax project to finance social reforms

The Chilean President, Gabriel Boric, unveiled a government tax strategy to raise fiscal revenue, aiming to finance social reforms in pensions, healthcare, and security worth US$8 billion.

The proposal includes measures like enhancing tax enforcement, restructuring the state, and raising taxes on higher-income sectors to cover urgent social expenses.

Named the fiscal pact for development and well-being, the plan is seen as a significant political and economic agreement and an essential structural reform in Boric’s program since taking office in March 2022.

The project, to be submitted to Congress, aims to establish a “modern, fair, and efficient” tax system in Chile.

This initiative will increase contributions from higher income brackets and inject transparency, ending tax avoidance and evasion.

Additionally, the government plans to use this revenue to enhance retirements through pension reform, reduce hospital waiting times, strengthen primary care, and create a universal care system.

There is also a US$1.5 billion investment in citizen security aimed at crime prevention, police improvement, promoting sports, culture, and neighborhood organization.

These proposals require an expenditure of US$8 billion, equivalent to 2.7 percent of Chile’s Gross Domestic Product (GDP).

The project is expected to bolster tax administration by enhancing efficiency in compliance and enforcement, along with reforming income tax.

Boric also announced 38 initiatives related to investment, reducing informality, and boosting productivity in industries like mining, renewable energy, and the digital economy.

Anti-corruption measures, state control, and evaluation of commitments in his term will also be promoted.

This announcement comes after the rejection of Boric’s previous tax reform project in Congress last March, a key pillar for financing his social policies.