Chilean lawmakers have passed a bill to raise taxes on the rich while reducing the burden on the elderly and small businesses, a nod to months of protests over inequality in the South American nation.
People protest against the economic policies of the government of President Sebastian Pinera and clash with riot polcie in Santiago, Chile. Photo: AFP / Pablo Rojas Madariaga/NurPhoto
The legislation is expected to boost Chile´s total tax haul, helping underwrite other costly measures demanded by protesters, including a guaranteed minimum wage, a pension plan overhaul and changes to the country’s public-private health system.
The most violent, widespread riots since Chile´s return to democracy in 1990 have rocked the top copper producer´s economy as demonstrators demand a stronger social safety net. Growth, investment and consumer demand are all expected to decline as the fiscal deficit yawns.
Chilean Finance Minister Ignacio Briones called the nearly two-year-old bill, rewritten amid the unrest in late 2019, a compromise that would help spur investment while levying taxes in a "progressive manner ... something we all value."
Chileans who earn over $18,900 a month, or who own second homes and real estate, will see their taxes rise, while the elderly will pay less, according to a summary of the overhaul published by Congress.
The measure also streamlines the corporate tax system, setting the rate for large businesses at 27 percent, the summary said.
Chile´s once stable economy is expected to struggle at least through 2021 after protests caused billions of dollars in damage to public infrastructure and private business.
The central bank in December slashed its 2020 growth forecast to a range of 0.5 percent to 1.5 percent from a previous 2.75 percent to 3.75 percent.
The tax bill also includes several measures to help spur investment.
The measure is expected to take effect in March, following review by the country's Constitutional Court.
-Reuters
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A previous version of this story was headlined: Chile announces progressive tax measures to quell mass protests.
A number of small edits had also been applied, including removing the word “costly” from the description of measures demanded by protestors, and the addition of the words “and an end of pervasive inequality” after the words “a stronger safety net”.