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Boric’s bet to improve his popularity

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With a popularity of 34%, the president of Chile, Gabriel Boric, announced this Friday a tax reform project that proposes a wealth tax on people with assets greater than five million dollars as well as raising royalties for the activity mining, seeking an improvement in the social rights of Chileans.

Health, social housing, education, pensions, among other points, are the bets of the leftist president, Gabriel Boric, with his ambitious project on a tax reform, which aims to improve the so-called “social projection system”, one of his promises campaign.

The bill, which also seeks an increase in royalties for copper production for companies that produce more than 50,000 tons a year, has caused great controversy in the opposition and in part of Chilean society. Right-wing opponents believe that it is a very ambitious project that could seriously affect the economy, which reports inflation of 11.5% year-on-year.

“I thought that the government’s first economic announcement was going to be focused on how to deal with inflation,” right-wing opposition senator Juan Antonio Coloma said after the news broke.

The Chilean president assured that his project “goes beyond a government in power (…) The objective of a tax reform is precisely to advance towards greater equity, advance towards greater equality and social cohesion.”

Tax evasion and inequality, the challenges of the Chilean economy

By 2020, the Southern Cone country collected 29.3% of its GDP through taxes, a low rate compared to the average for the region, which stands at 33.5%. With the bill, it is estimated that only 3% of the population will be required to pay a new tax.

The Minister of Finance, Mario Marcel, in charge of presenting the proposal, stated that with the new measures, it is expected that by 2023 Chile’s tax collection will increase by 0.6% in GDP, up to 4.1% in 2025. Thus, the country would manage to reach the average of the countries of the Organization for Economic Cooperation and Development (OECD), to which Chile has belonged since 2010.

“Operating revenues have remained practically the same in the last 30 years,” assured the Minister of Finance, referring to the fact that this would be the third tax reform since 1990, which seeks to have a higher collection, but also a “more equitable” distribution. .

Despite the fact that Chile is one of the countries with the highest per capita income in Latin America, it is also classified as one of the most unequal States and with the least redistributive capacity of the OECD countries, also known as the “club of the rich” .

According to World Bank calculations, more than 30% of the Chilean population is economically vulnerable. The Boric government claims that the fiscal changes proposed in the reform are necessary to achieve a “real transformation” and achieve campaign promises.

“The reform is quite realistic, flexible and aims to affect those people who have more resources or who have this terrible practice of evasion,” said Socialist deputy Jaime Naranjo.

An environment of change and unpopularity

Gabriel Boric, 36, won a landslide victory in the 2021 elections, with a percentage of more than 55% of the votes, becoming the president with the most votes in the country’s history. However, after nearly four months in office, his popularity has waned.

Parallel to Boric’s new proposal, the Constitutional Convention completed the drafting of the new Constitution of Chile, an achievement of the social mobilizations that the country experienced in 2019. Next Tuesday it is expected that the draft will be delivered with 388 items to the agent.

After this meeting, the Constitutional Convention will be dissolved and President Boric will call a plebiscite with a mandatory vote, set for September 4, where Chileans will vote if they maintain the neoliberal constitution of dictator Augusto Pinochet, in force since 1980, or if they choose for a new Magna Carta.

Members of the Constitutional Convention (from left to right) Julio Abra, Adriana Cancino and Yareli Gómez pose for a photo during the official presentation of the draft of the new constitution, at the Huanchaca Ruins National Monument in Antofagasta, northern Chile.  Chileans will vote in a mandatory referendum on September 4 to approve or reject the new constitution
Members of the Constitutional Convention (from left to right) Julio Abra, Adriana Cancino and Yareli Gómez pose for a photo during the official presentation of the draft of the new constitution, at the Huanchaca Ruins National Monument in Antofagasta, northern Chile. Chileans will vote in a mandatory referendum on September 4 to approve or reject the new constitution © AFP – CHRISTIAN RUDOLFFI

The new text seeks better access to health, education, decent housing and seeks to include the right to abortion constitutionally, in addition to proposing a new ordering of the political and justice system, where power will be distributed regionally, as well as in the autonomy of indigenous communities and in gender parity in the public and private sectors

With Boric’s new announcement and the hypothetical change of the Chilean Constitution, the results are expected to reflect the direction of the left in the country, which could be extrapolated to the rest of the region.

With Reuters and EFE

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Written by Editor TLN

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