The Chilean Senate has approved a major economic and tax reform bill proposed by President José Antonio Kast’s administration, aiming to boost the national economy and attract new investments. The bill passed by a narrow margin after a lengthy 12-hour debate that extended until nearly 3 AM due to disagreements among senators.
Minister of Finance Jorge Quiroz highlighted the significance of the approval, stating, “Today is an important day for Chile. Chile needs to grow, and this project makes it possible.” The administration sees the reforms as a tool to stimulate investments, create jobs, and revive an economy still struggling to recover from the COVID-19 pandemic. However, the opposition argues that the bill favors the wealthy and criticizes the loosening of tax and environmental rules that they believe could hinder the nation’s development.
The debate over the bill occurs amid economic stagnation in Chile, marked by a 0.5% dip in the Gross Domestic Product (GDP) in the year’s first quarter, following months of negative economic performance. Additionally, the country posted a 9.4% unemployment rate for the mobile quarter between March and May, its highest since June 2021.
President Kast, a 60-year-old conservative lawyer, took office in March promising an “emergency government” to address Chile’s battered economy. His presidency represents the most pronounced shift to the right since the military dictatorship era (1973-1990) and defends a neoliberal economic policy aimed at reducing state involvement and granting greater autonomy to private initiatives.
Political analyst Gilberto Aranda commented, “What existed previously was neoliberalism adjusted with subsidies and other elements. Now, the presidential efforts are focused on deepening and returning to the orthodox neoliberal model of the late 70s and early 80s.”
One of the main late-night debates centered around the tax exemptions and compensations available to companies with projects rejected due to environmental reasons. The Senate voted 26 in favor and 24 against to approve a gradual tax reduction for large companies, lowering the current 27% rate to 23% by 2029. The same number of votes approved the provision to refund expenses to companies whose projects are revoked on environmental grounds. Opposition senators criticized these measures as irregular, with some vowing to challenge them in the Constitutional Court.
“What the right has done is grant a tax amnesty,” stated Senator Yasna Provoste of the Christian Democratic Party.
The approved measures also include a new tax regime for investments and exempting property taxes for senior citizens owning their first home, among other provisions.
Despite the Senate’s approval, the bill must return to the Chamber of Deputies, which had initially endorsed the proposal in late May. The return follows the incorporation of new amendments, including a financial “right to be forgotten” regulation, requiring the removal of prescribed or extinguished debts from financial records after five years. The lower house must now address all changes introduced by the Senate, marking a potentially complex phase of the legislative process following Thursday’s close vote.
If any amendments are rejected, the process could extend for several more months, necessitating the formation of a bicameral commission to resolve differences.