LatinNews Daily - 04 July 2022

*Chile’s leftist government led by President Gabriel Boric has presented a major tax reform package, a key initiative for Boric who has already seen popularity ratings plummet since taking office in March. According to Finance Minister Mario Marcel, who presented the package, it would boost tax take by 4.1% of GDP over four years. The reform seeks to address the roots of inequality and achieve a more equal distribution of wealth by taxing the highest earners (Marcel said that 97% of taxpayers would not be affected). He said the reform would also target royalties from mining companies and there were two components to this initiative, both of which depend on copper prices. One is an ad valorem tax of between 1% and 2% for firms that produce between 50,000 and 200,000 tonnes (t) of fine copper a year and a rate of between 1% and 4% for those that produce more than 200,000t. The other component is a rate of 2%-32% on profits for copper prices between US$2 and US$5 per pound. The tax reform is structured around four legislative initiatives, two of which will be submitted to congress in July, while the others will be finalised in the fourth quarter of this year. Marcel noted that Chile, with a tax collection rate of 20.7% of GDP, is below the median for Organisation for Economic Co-operation and Development (OECD) members of 34.7% of GDP.

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