SANTIAGO: Chile's president Michelle Bachelet said there will be room for negotiation on her ambitious tax reform proposal when it reaches the Senate floor shortly, but emphasized in an interview with a local newspaper that the heart of the bill will not be modified.
The bill seeks to raise Chile's tax haul by 3 percent of gross domestic product, or some $8.2 billion, and is designed to fund an overhaul of education and healthcare as Bachelet and her Nueva Mayoria coalition government, which came to power in March, seek to tackle inequality in the top copper exporter.
Plans to raise corporate taxes to 25 percent from 20 percent and to scrap the so-called 'FUT', a mechanism by which companies can gain tax exemptions on a part of their profits, encompass the core of the reform.
"I've told all the political parties, (regarding) the tax reform, that the heart of the reform will not be changed," Bachelet told La Tercera in an interview published on Saturday.
That not only has to do with the amount of money the reform seeks to raise, but "also tax fairness, and that has to do with income tax and the FUT, among other things," she said.
It also looks to lower the maximum tax bracket for personal income tax to 35 percent from 40 percent.
Businesses have expressed concern about plans to scrap the 'FUT', claiming that the move will stem investment in an economy that is already stalling. For its part, the government argues that the mechanism is being misused for tax evasion purposes.
The tax reform proposal was approved by Chile's lower house of Congress after a marathon late night session on Wednesday night, and the bill will now move to the Senate.
"There were a series of changes that were presented in the Lower House and surely in the Senate there will be space for more dialogue, but those are my limits," Bachelet said referring to her desire to keep the core of the reform intact.
Bachelet's comments mirror those of lawmakers who told Reuters earlier this month that Chile's Congress will likely tweak the reform after it moves to the Senate, but that the crux of the bill will remain unchanged
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