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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

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. Read full article

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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 - Link - Report abuse 0
  • DanyBerger

    Horror!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    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...

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

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

    Dany

    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 - Link - Report abuse 0
  • ManRod

    Dany is hopeless. When arguments do not exist, the cheap insult is the only path these “individuals” follow...

    Apr 01st, 2014 - 08:47 am - Link - Report abuse 0
  • cornelius

    As i predicted you can read these socialist like and open book of doomsday they will socialize trough taxation to give lazy people a check and they will subsidize the government income with crime just like in the other Bolivarian countries.

    Apr 01st, 2014 - 10:18 am - Link - Report abuse 0
  • CaptainSilver

    This is the wrong way to go. Creating free Universities will spawn a load of eternal students and scroungers just like in Britain doing useless degrees in History of Art, Interior Design and Hairdressing. And, taxing investment in business improvement and R&D is crazy. Low taxes make for a dynamic economy, high taxes will create a wasteland.

    Apr 01st, 2014 - 10:47 am - Link - Report abuse 0
  • Anglotino

    @5 Cornelius
    I think you have jumped the gun a bit. A slight increase in taxation to a rate that isn't even considered excessive by any international norm and reform of education is hardly the road to Venezuela.

    Exaggerate much?

    @6 CaptainSilver
    As you do not know the exact shape of the reform, it is a little hasty to condemn something that does not yet exist.

    “Low taxes make for a dynamic economy, high taxes will create a wasteland.”

    Fair taxes create an equitable society. Unfettered and laissez-faire economies is not what every society wants, as far as I can see; it is only what the US wants. As far as I am aware, the Nordic countries and places like Australia are hardly wastelands and seem to have pretty good and dynamic economies.

    Apr 01st, 2014 - 11:25 am - Link - Report abuse 0
  • yankeeboy

    Bad idea. Wouldn't it be more equitable to offer poor students a scholarship if they qualify with good grades?
    Rather than more bloated mismanaged State gov't?

    Apr 01st, 2014 - 12:15 pm - Link - Report abuse 0
  • CaptainSilver

    Anglotino, this is the route that Sweden mistakenly went down some years ago. The big mining companies can afford to pay (actually it will be mainly the Chinese and the rest of us paying if you think about it), but extra taxes on innovative companies in the rest of the economy is a very bad idea. Getting to University should make some demands on you and the number of History of Art course offered should be severely restricted. Chile needs to look at its economy and ration out the course opportunities to what the country needs. Otherwise you end up with thousands of unemployed and underemployed graduates like here in Britain. Education isnt a right its a priviledge

    Apr 01st, 2014 - 01:09 pm - Link - Report abuse 0
  • ManRod

    *Education isnt a right its a priviledge = wrong

    You have to be more precise:

    1. Primary and secondary education is a right (it has always been in Chile)
    2. Tertiary education is the extra mile based on personal effort and will

    With Bachelet on power, Chile turns a bit more to the left. But by international standards, she's still very far away to be @ levels of Venezuela or Argentina, even some “Think”ers would love to drag us down with them too. Their models are rather comparable to the equivalents of Germany (SPD). Even the french socialist party would be described as much more radical...

    Apr 01st, 2014 - 01:35 pm - Link - Report abuse 0
  • Condorito

    What will this actually achieve?

    The increase in tax on profit for companies that sell products and services in the domestic market will be passed on to the consumer. Result higher prices.

    Companies that sell to international markets will have to re-evaluate their investment plans. A 5% hit is enough to start looking around for better locations. Result lower investment.

    So the average Chilean will face a scenario of higher prices, higher unemployment, downward pressure on wages and a slim chance of getting his children to a good university.

    The wealthy Chilean will be paying less income tax and have a good chance of his children going to university ... and getting it free.

    I don't think these changes will be too dramatic because Chile remains a good place for business, but the people who voted Bachelet in because they liked the sound of “free” education are going to be disappointed.

    There is one important item not mentioned in the article and it will probably be the most polemic as this project goes through congress and that is a mechanism called “FUT” that the bill proposes scrapping.

    It allows businesses to only pay tax on profits drawn down. It is not clear to me what the new law will look like on this issue, but it is likely that these massive amount of untaxed profits will be “motivated” towards investment. I think Bachelet is counting on this measure to off set the probable fall in investment brought on by the tax increases.

    @8 yankeeboy
    Absolutely agree.

    @10 ManRod
    “Tertiary education is the extra mile based on personal effort and will”
    Well said.

    ...

    It is funny that Dany thinks reducing the maximum rate of income tax from 40% to 35% is Marxist. Or that increasing taxes on alcohol and sugary drinks is populist. Or that Anglotino is Chilean. Lol.

    Apr 01st, 2014 - 02:01 pm - Link - Report abuse 0
  • bushpilot

    “and ending a system dominated by private, for-profit schools.”

    Wasn't part of the “free education” protest that there would also be better access to these private, for-profit schools?

    Will a diploma from one of these schools still be a “dominant” credential?

    How is this legislation going to affect these already established institutions?

    Apr 01st, 2014 - 03:23 pm - Link - Report abuse 0
  • DanyBerger

    @Condorito

    Oh! poor Condorito suddenly he has turned Marxist and he has not even know it.

    This is a typical Marxist policy “taken from the have to give to the have not”

    While business and wealthy people what are the engine of the economy are now over taxed they relax taxes for workers instead of encourage them to scale the pyramid.

    What do you think is going to happen next?

    Prices will go up consumption will go down but you will have free education then they will ask for free cars, free housing, free trips to Miami and you will have to pay for their guaguitas too.

    So basically is a subsidy for the poor to remain poor.

    Venexula style and the beginning of the end of Chile's economy.

    Apr 01st, 2014 - 06:15 pm - Link - Report abuse 0
  • Condorito

    @Dany,
    I think you misunderstand.
    The upper rate of income tax is to be reduced.
    “Reduced” that means to go down.
    Down from 40% to 35%

    This means the wealth pay less tax dany, less not more.

    Now, I am not going to get out my copy of The Communist Manifesto to search for where Mr Marx advocated lowering tax on the rich.

    Why are you asking me what will happen next and then telling me prices will rise - that is the first point I made in my post @11.

    Apr 01st, 2014 - 06:48 pm - Link - Report abuse 0
  • Anglotino

    There seems to be this idea that the only options open to a country are at the extreme ends of the economic and or political spectrum.

    The choice is not between extremely low taxation and punishingly high, but a choice of fair and affordable taxation.

    The choice is not between unfettered and trialled free education for all and every single user paying, but a equitable investment and return in the education of society.

    Chile will not make the next leap in development unless it opens education up to as many people as possible. You cannot become a highly developed and tertiary industrial and service economy with the education of an agrarian or cheap manufacturing economy.

    Chile has some choices about its future direction to make. Thankfully it is not opting for paying for everything on the credit card.

    Currently a business locating to South America has a choice of locations to be based. Believe me, a strong legal system with low corruption together with political and civil stability is much more highly valued than rock bottom taxation.

    Anyway I think Dany has pissed off. Hardly surprising.

    PS: Condorito, I also noticed he called me Chilean. Paul calls me a Falkland Islander. Indicative of both their cognitive abilities.

    Apr 01st, 2014 - 08:02 pm - Link - Report abuse 0
  • Condorito

    @15 Anglotino
    “Condorito, I also noticed he called me Chilean” - take it as a compliment ;)

    Apr 01st, 2014 - 10:04 pm - Link - Report abuse 0
  • Anglotino

    Oh I do. There are many natural affinities between Australia and Chile so it isn't surprising.

    As for my opinions above, I don't have the on the ground experience and perspective that you do, so might be missing a lot more. While there is a tendency for Latin American politics to inhabit the more extreme ends of the political spectrum, I think there has been a migration to the centre. Same as in Australia. There will always be fringes but most policies will always be tempered by the centre.

    Apr 02nd, 2014 - 12:40 am - Link - Report abuse 0
  • ilsen

    Some very good points are being raised on this thread.
    Thanks!
    Too busy to contribute but will follow if doesn't descend into a slanging match.

    Apr 02nd, 2014 - 01:03 am - Link - Report abuse 0
  • Heisenbergcontext

    Just heard about the earthquake and subsequent tsunami. Hope the Chilean posters are safe ( with intact internet ). Condorito: it seems you have a crystal ball.

    Apr 02nd, 2014 - 01:35 am - Link - Report abuse 0
  • ElaineB

    I am in the central region at the moment and didn't feel it. Though, there have been some strong quakes since I arrived. It seems not many people felt it in Santiago.

    I didn't think earthquakes could be predicted but the papers have been talking about an imminent strong quake in Iquique for a few weeks now.

    Apr 02nd, 2014 - 02:30 am - Link - Report abuse 0
  • Heisenbergcontext

    @20

    8.2 magnitude, 10km below seabed, 99 km north-east of Iquique. two metre high tsunami. A serious quake. People are being evacuated and the power is out is some areas. Glad you're safe.

    Apr 02nd, 2014 - 02:43 am - Link - Report abuse 0
  • ElaineB

    @21 Thanks. I think a lot of the evacuations are precautionary in this region. A friend in Copiapo sent me a message saying it felt very strong there.

    Apr 02nd, 2014 - 02:51 am - Link - Report abuse 0
  • Chicureo

    We felt nothing here. Evacuations on the coast have been ordered, but apparently the anticipated tsunami seems to be a non-event, which symbolizes the taxes proposed by our president...
    Things will not change much in the next 10 years.

    Apr 02nd, 2014 - 03:24 am - Link - Report abuse 0
  • Heisenbergcontext

    @23

    Glad you too are intact. As far as no change for the next decade, if this also applies to violent tectonic plate shifting I think this is probably a very good thing :-).

    Apr 02nd, 2014 - 04:27 am - Link - Report abuse 0
  • Chicureo

    Thank you #24, but I can't make any bets regarding violent tectonic plate shifting, except it is, and always will be, part of Chile.

    Apr 02nd, 2014 - 10:44 am - Link - Report abuse 0
  • Condorito

    @19 Heisenberg: crystal balls intact.
    ...
    Here in Elqui we didn't feel it, but the coast was evacuated as a precaution. Almost 1 million people evacuated from their homes last night and school cancelled today - the children are happy!

    Some seismologists say it could be the precursor to an even bigger one!

    @Elaine
    I am beginning to think you live here.

    Apr 02nd, 2014 - 11:49 am - Link - Report abuse 0
  • Heisenbergcontext

    @25 Chicureo

    I think Johnny Cash sang your ( alternative ) national anthem about 50 years ago.

    @26 Condorito

    Never doubted it for a minute.

    Apr 02nd, 2014 - 12:00 pm - Link - Report abuse 0
  • ElaineB

    @26 Yes, I keep hearing another, even bigger, earthquake is imminent. I honestly didn't think they could predict them.

    No, I don't live here. Just doing some research and a little too much socialising. :) I shall be heading home in a couple of weeks.

    Apr 02nd, 2014 - 01:16 pm - Link - Report abuse 0
  • ilsen

    Glad to hear you are all ok.

    Apr 02nd, 2014 - 04:24 pm - Link - Report abuse 0

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