MercoPress. South Atlantic News Agency

Chile announces one billion US dollars tax-cut package

Chile announced Friday a one billion US dollars tax-cutting package aimed at curbing inflation, which is running at 14 year highs, and boosting growth. Measures include temporary reduction of tax on fuel and tax cuts on checks and electronic transfers.

"This responsible effort is a government strategy to attack inflation with a responsible fiscal policy which ensures social investment and boosts economic growth", said Economy minister Andres Velasco. He added resources will be used to support small enterprises and the average taxpayer while "we continue to diversify our energy matrix, reducing our dependency on imported fuel" The package includes 600 million US dollars in tax breaks and 400 million in energy project investments. The energy initiative will offer fiscal credit for homes heated by solar energy and promote projects for small hydroelectric plants plus other alternative renewable sources. Chile is highly dependent on imported energy and has been particularly hit by Argentina's natural gas policy of privileging domestic demand in spite of international agreements. The latest announcement is in addition to the April decision from the Central Bank to purchase 50 million US dollars per banking day in the money market to help boost the value of the greenback, thus alleviating traditional labor intensive exports. The eight billion US dollars earmarked for monetary investment has meant that the local currency Peso has now depreciated around 4.12% against the US dollar so far this year after appreciating 6.44% in 2007. Actually the Chilean peso has weakened around 17% since the central bank April intervention program to curb a sharp appreciation of the local currency following on protests from exporters of goods with a significant input of Chilean cost. US beef and chicken for satisfied Chilean consumers The first shipment of United States beef began to be sold last Friday by a chain of Santiago de Chile supermarkets, further diversifying the country origin of market suppliers. Although it was a modest beginning, one thousand kilos, the ceremony included US ambassador in Santiago Paul Simons and two representatives from the US Agriculture Department, Richard Raymond and Cindy Smith. US also began supplying the Chilean market with chicken and turkey last April. So far this year twelve full containers of frozen broilers and turkey have arrived in Chile and apparently with a good demand from Santiago consumers. Chile and the United States have a free trade agreement which has virtually eliminated tariffs on most items of bilateral commercial exchange. Chile which is a net importer of beef now has as its main supplier, Paraguay, which has replaced traditional providers such as Argentina and Brazil. Argentina has seen exports seriously curtailed as a direct consequence of the farmers/government conflict which limits overseas sales to privilege domestic demand at "reasonable prices". Brazil has suffered several setbacks with outbreaks of foot and mouth disease which have limited exports. Uruguay which is the other option has become too expensive for Chile. Uruguayan quality beef, and with the most serious sanitary record in Mercosur, has great demand from the European Union, Russian Federation and Nafta country members, US, Canada and Mexico. Uruguay has occasionally imported bovine sweetbreads, which are considered a delicatessen by the Uruguayan cuisine, from United States.