President Piñera Promulgates Middle Class Relief Bill

President Piñera Promulgates Middle Class Relief Bill

SANTIAGO – After an extraordinary Congress session that went on for over nine hours on Apr. 4, President Piñera promulgated the law set to benefit middle class families. The economic relief bill proposed by the executive includes CLP$500,000 (US$700) handouts and loans.

Chile’s Congress met on Easter Sunday to discuss an amendment to postpone the April elections to May, and the executive proposal to provide more financial support to the middle class. The Senate passed President Sebastián Piñera’s relief package with 32 votes in favor, and 10 abstentions. The Socialist Party and Democratic Revolution senator Juan Ignacio Latorre, who abstained from the vote, argued that the government can do more to help people during the Covid-19 crisis. On Apr. 5, the head of state announced the passage of the bill.

In addition to cash handouts, the Senate also approved an increase of the scope of the Emergency Family Income (IFE) from 60 to 80 percent of the most vulnerable families. One of the most discussed motions was the compatibility of the middle class relief bill (Bono Clase Media) with other state benefits, such as the IFE.

During the discussion, ruling-party senators praised the government for trying to benefit more families with its proposal; however, opposition members criticized the executive branch’s insistence on aid that is difficult to access and the lack of an adequate appeals process for applications.

The new package is set to complement last year’s measures announced by the government.

Middle Class Relief

The Bono Clase Media consists of a CLP$500,000 (US$700) cash handout to families whose incomes were affected by the coronavirus pandemic.

There will be no formal requirements for those whose earnings fall between the minimum wage and CLP$408,125 (US$565), provided the income is from official employment. Those who earned between CLP$408,125 and CLP$1.5 million (US$565 and US$2,080) must show a 20 percent loss on employment income.

If workers earn between CLP$1.5 and CLP$2 million (US$2,080 and US$2,770), they will receive payments between CLP$100,000 and CLP$400,000 (US$138 and US$555).

Additionally, if a household is enrolled in the Housing Social Registry, there will be a further payment between CLP$125,000 and CLP$250,000 (US$173 and $347) for every member that is disabled, a minor, or 65 and older.

Solidarity Loan

Furthermore, the law also includes the Préstamo Solidario (solidarity loan), which will reimburse 100 percent of any lost income (up to CLP$650,000 / US$905). If requested with Bono Clase Media, workers are able to split the loan into two installments, otherwise they may request the loan in up to three payments.

Repayments will consist of four interest-free yearly payments, which will not exceed five percent of the worker’s annual salary.

Compatibility with Other Benefits

One of the most heated moments of the debate was the discussion over the eligibility of the cash handout if beneficiaries also receive other state aid.

Finance commission president and Christian Democrat Ximena Rincón argued that the benefit still leaves out many others, for instance, those in informal jobs: “they account for a third of our country’s workforce, they’re not formally employed but they keep the economy and their families going.”

Independent legislator Carlos Bianchi said “big announcements come with a small print, and the benefits ultimately aren’t what they’re announced. More clarity is needed.”

Meanwhile, Presidency Subsecretary Carlos Bianchi indicated that making the cash handout compatible with other state benefits would require greater public expenditure.

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