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Bachelet sends corporate tax bill to Congress; first step for education reform

Tuesday, April 1st 2014 - 04:06 UTC
Full article 29 comments
The Chilean president signs the bill, the center piece of her electoral campaign The Chilean president signs the bill, the center piece of her electoral campaign

President Michelle Bachelet sent Chile's Congress a bill on Monday that would raise corporate taxes to fund a sweeping overhaul of the country's education system. The proposed reform aims to raise 8.2 billion dollars to fund tuition-free public universities, a demand that fueled massive student protests under Bachelet's conservative predecessor Sebastian Piñera.

 Bachelet, a socialist who took office on March 11 for her second, non-consecutive term, said it was “the beginning of one of our government's most important reforms, along with education reform and a new constitution.”

If passed, as seems likely, the bill would raise the corporate tax rate from 20 to 25% by 2017 and eliminate a deferment on taxes on reinvested earnings.

However, it would also lower the top tax rate for individuals from 40 to 35%. Salaries of 10,500 dollars or more a month would be taxed at the highest rate.

“The objective behind this measure is to give more equitable tax treatment to income from work in relation to income from capital,” Bachelet said.

It comes at a time when the Chilean economy is experiencing slowing economic growth as a result of falling copper prices and declining investment.

Business groups have expressed concern about creating disincentives to investment. But Bachelet insisted growth would not be hurt by the reforms and that a healthy economy required an equitable society that strengthens its human capital and creates high quality institutions.

”The (tax) is meant to have a political, ideological and public relations impact in terms of showing that all the traces of the Pinochet era are being erased in Chile's institutions, political and economic,” said University of Chile analyst Guillermo Holzmann.

Bachelet has promised to usher in free university education in six years, while improving the quality of public education and ending a system dominated by private, for-profit schools.

Categories: Economy, Politics, Latin America.

Top Comments

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  • Anglotino

    Sounds perfectly legit to me.

    Tax rates is only one of the concerns an overseas business will have when investing, and not even the most important.

    Apr 01st, 2014 - 04:13 am 0
  • DanyBerger


    This is the beginning of the end for Chile and will end like Venexula and Populist Argentlatina

    Marxist populist will give education for free now and then what?

    Sure they will ask later for fair salaries and all this kind of Marxist ideas.

    Another country ruined in Latam...

    Are you communist now idiot?
    Do you miss so much your country Chile right?

    Apr 01st, 2014 - 06:24 am 0
  • Anglotino


    All you have done is prove you prejudge me. Unless someone agrees with you, they can only be right-wing.

    Just because you inhabit an extreme end of the political spectrum doesn't mean everyone else does.

    Chile is politically more aligned with the left and right in Australia than it is with Argentina or Venezuela.

    Apr 01st, 2014 - 07:32 am 0
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