Chile Files Bill to Lift Growth to 4%, Cut Unemployment to 6.5%

The Kast Chile reform bill is the most ambitious pro-investment legislative push since Chile’s Boric-era tax projects failed — now routed through a Congress where the governing coalition does not have the votes to pass it unaided.

The Rio Times, the Latin American financial news outlet, reports that Chilean President José Antonio Kast on Wednesday, April 22, formally filed the National Reconstruction and Economic and Social Development bill in the Chamber of Deputies, delivering the 40-plus measure Kast Chile reform package he announced in his first message to the nation on April 15. The centrepiece is a staged reduction of the corporate tax rate (Primera Categoría) from 27% today to 25.5% in 2027, to 24% in 2028, and to 23% from 2029 onwards. The rate for small and medium enterprises (PYMEs) would fall from 25% to 23% starting in 2030, a measure presented alongside a payroll tax credit for vulnerable workers that would channel US$1.4 billion annually to an estimated 235,000 SMEs.

The bill bundles structural tax cuts, transitional incentives, housing measures, and capital repatriation windows into a single legislative vehicle. The 12-month zero-VAT window on first sales of new housing — effective August 2026 through August 2027 — targets a construction sector that the government argues has destroyed roughly 180,000 jobs and carries an inventory of more than 100,000 unsold new units, while DFL 2 housing benefits would tighten from the third property. The package also reinstates a tax-invariance statute for long-term investments and includes a window for the regularization of old retained earnings, reduced donation costs, and relief on overdue tax liabilities.

What the Kast Chile reform is designed to deliver

Kast framed the reform in terms of three macroeconomic targets to be met by the end of his term in 2030: annual GDP growth of approximately 4%, unemployment at 6.5% (against the roughly 8.5% of 2025), and fiscal accounts in structural balance. Chile grew 2.5% in 2025 and the World Bank projects 2.2% for 2026, restrained by copper-price volatility, US trade tensions, and elevated construction-sector unemployment. The 4% target is a pace Chile has not sustained since the commodity supercycle of the early 2010s.

The government argues that the corporate tax cut will benefit 150,000 companies that employ more than 50% of Chile’s formal labour market and concentrate 90% of national investment — the explicit policy logic being that a lower effective tax burden, combined with the tax-invariance guarantee, will restart the private-investment cycle that stalled under the previous administration. The Finance Ministry’s structural balance trajectory, however, was already under pressure before the reform: Chile‘s 2025 structural deficit hit 3.6% of GDP, the highest non-crisis reading on record. The Kast team’s pledge to cut US$6 billion from public spending over 18 months is intended to bridge part of the gap, but opposition analysts say the math does not work without higher growth actually materializing.

The fiscal counter-case against the Kast Chile reform

A minuta released this week by former officials of the Boric government’s Treasury, Dipres budget office, and Internal Revenue Service (SII) estimates the reform would reduce fiscal revenue by US$4.4 billion annually — roughly 7% of Chile’s annual state income — and widen the structural-balance gap to US$14 billion, or slightly more than 4% of GDP. The opposition minuta argues that the proposed spending cuts, higher-growth revenue effects, and recaudation measures are “insufficient” to cover the cost of the reform even with gradual implementation. Former finance minister Carlos Ominami and economist Osvaldo Rosales have described the package as “a tax reform in disguise” that risks deepening the deficit and public debt.

Interior Minister Claudio Alvarado has defended the framework, arguing the reform will be financed through a US$3 billion fiscal adjustment, growth effects, and spending restraint. The government has also emphasized that bundling structural and transitional measures into a single bill is a deliberate legislative strategy — the corporate tax cut on its own faces uncertain votes in the Chamber, and the single-vehicle approach reduces the opposition’s ability to pick measures off individually. Critics, including from Frente Amplio president Constanza Martínez, have called the package a benefit tilted toward higher-income sectors at the expense of middle-class and working-class Chileans.

The legislative math and what investors should watch

The approval test is the most difficult element. Kast’s right-of-centre coalition has more legislators than any single opposition bloc but does not have the votes to pass the Kast Chile reform package unaided, and the Chamber math requires negotiation with centrist and moderate-left legislators on almost every clause. The opposition has also signalled it may take the bundling strategy to the Constitutional Tribunal, arguing that grouping multiple tax reforms into a single vehicle limits parliamentary deliberation.

For international investors positioning in Chilean assets, the corporate tax cut is one of two re-rating catalysts already priced into equity markets — the other being copper prices above US$4.50 per pound. The IPSA delivered 56% returns in 2025, trades around 12x P/E with 14% consensus EPS growth, and hit an all-time high of 11,721 in January 2026 on Kast’s inauguration. The risk to that thesis is the gap between the announcement and the Congressional outcome — and Kast’s approval rating, which fell to 33% in the April 19 Pulso Ciudadano poll from 59% at inauguration, has narrowed the political capital available for the negotiation.

What to watch in the next phase: the Chamber’s Hacienda Committee vote on the corporate tax clause, the Constitutional Tribunal challenge if opposition files one, and the March 2027 implementation of the first-step rate cut to 25.5%. For the broader sector context, see The Rio Times Chile Economy 2026 outlook, which covers the copper supercycle, the NovaAndino Litio joint venture, and the IPSA rerating arithmetic that the Kast Chile reform is meant to deliver against.

Related coverage: Chile Economy 2026: Kast, Copper and the Path Forward • Kast Approval Collapse • Chile’s Deficit Hits Post-Pandemic High