Chile’s finance minister announces a new set of tax bills, which target high income earners and major copper mining companies. The bills aim to increase the state’s revenue to fund future social programs and reforms. The government assures that the changes will not affect a majority of Chileans.
Chile’s government announced on July 1 a new tax reform proposal, consisting of four bills, that raise taxes on the wealthiest 3 percent and increase copper mining royalties on companies that produce over 50,000 tons of copper per year.
The state revenue from these changes is intended to help fund proposed social programs and reforms down the road. However, Finance minister Mario Marcel assured that 97 percent of Chilean taxpayers will not be affected by the changes.
Copper mining companies that produce between 50,000 and 200,000 tons per year of fine copper will face an ad valorem tax between 1 and 2 percent. Whereas, companies producing over 200,000 tons of copper per year will face a rate between 1 percent and 4 percent. Mining royalties will also include rates between 2 percent and 32 percent of profits from copper sales, however, these will depend on the price of copper. During Marcel’s announcement of the bills, he assured that investors in the copper mining sector will still have enough income to renew investments.
A new “wealth tax” will include progressive rates based on three brackets. Assets valued up to US$5 million will be exempt from tax changes. Portions of assets valued between US$5 million to US$15 million will be subject to a 1 percent rate, and those exceeding US$15 million will be subject to a 1.8 percent rate.
Several changes were also introduced for income tax. To start, a new capital gains tax will be introduced at a 22 percent rate. The bill will also reduce the corporate income tax rate from 27 percent to 25 percent, and incorporate a new tax called a “Development Tax” of 2 percent. This Development Tax will be paid by crediting expenditures aimed at improving a company’s productivity.
“Historically, few countries have reached economic prosperity with a low tax load,” said Marcel. These changes are intended to raise revenue of about 4.1 percent of the gross domestic product by 2026.
Ishaan Cheema is an undergraduate student at the University of Calgary, studying Kinesiology, with a focus on Exercise and Health Physiology. He always had a passion for globalism and political journalism, which he explored through Model UN conferences, debate teams, and several other extracurriculars.