* Tax law changes to boost annual revenue by some $1 billion
* Revenue will help overhaul protest-hit education system
* Congressional vote a much-needed victory for unpopular
Pinera
By Alexandra Ulmer
SANTIAGO, Sept 4 (Reuters) – Chile’s Congress approved on
Tuesday major changes in tax laws aimed to provide funds for an
overhaul of the nation’s protest-hit schools, handing unpopular
President Sebastian Pinera a welcome victory a month from
municipal elections.
The tax overhaul driven by Pinera’s rightist coalition will
increase state revenue by some $1 billion per year – about 0.4
percent of gross domestic product (GDP) in the world’s biggest
copper producer.
Businesses in the Andean nation will face a higher tax rate
of 20 percent and fewer loopholes to evade them, though the tax
rate remains well below Latin America’s average rate of 25.06
percent in 2011, according to accountancy firm KPMG.
Hefty tax cuts planned for the most wealthy were removed
from the bill after months of jostling in Congress. T ax rates
for lower income earners drop on a sliding scale.
Billionaire Pinera, rated the most unpopular leader since
Augusto Pinochet’s bloody dictatorship ended in 1990, unveiled
the proposed reform in April in response to massive student-led
protests demanding free education and greater equality.
While the Andean country has long been held up as an
economic model in Latin America, it was rated the most unequal
country of the 34-member-state Organization for Economic
Cooperation and Development, or OECD.
The reform is not expected to calm student protests for free
and improved education.
“(The reform) is more about the rhetoric that they can use
around it as they head in the election and less about the real
impact it will have on the student movement,” said Risa
Grais-Targow, associate at Eurasia Group in Washington DC.
Its approval lands right before local elections on Oct. 28,
which will give an indication of how the right and the left –
both struggling with low approval ratings – could fare in the
2013 presidential race.
Pinera, whose approval rating is languishing at 27 percent
according to a recent survey by pollster CEP, is barred by the
constitution from running for a second consecutive term.
The reform could give his conservative bloc a small boost in
next year’s presidential election, when leftist former President
Michelle Bachelet is widely expected to try to stage a comeback.
“This is undoubtedly going to help the right more than
Michelle Bachelet,” said Ricardo Israel, professor of law and
political science at the Universidad Autonoma de Chile. “The
right is taking away a flagship part of Michelle Bachelet’s
campaign … she’s going to have to move even more to the left.”
Bachelet, the current executive director of U.N. Women, has
yet to say whether she will run.
Public Works Minister Laurence Golborne, Defense Minister
Andres Allamand and Economy and Tourism Minister Pablo Longueira
are seen as the front runners of the conservative bloc, which
ended two decades of left-wing rule in 2010.
