The government of President Gabriel Boric suffered a severe setback on Wednesday after the Chamber of Deputies refused to advance in the discussion of a deep tax reform, aimed at financing some of his campaign promises.
With 73 votes in favor and 71 against, the legislators rejected the initiative presented last July, which needed 79 votes to continue in process.
The government could still push the initiative through the Senate, where it does not have a majority.
The total tax adjustment seeks to collect up to 3.6 points of Gross Domestic Product (GDP) under a regime and contemplates a mining royalty, which is being processed separately in the Legislature.
The finance minister, Mario MarcelHe regretted the rejection and said that the way to go forward with the government’s agenda will be reassessed together with President Boric.
“We are not currently in a position to define exactly what steps are to be followed”, he told reporters.
“Regardless of the steps that are followed, of the arguments that are given and decisions that are made, I believe that the fact that the idea of legislating for a tax reform and all its components has been voted against, I believe that it is a matter of the greatest political, economic and social gravity”, he added.
The framework law, which would represent 2.7 points of the GDPincludes adjustments for income and wealth taxes, reduction of exemptions, measures against evasion and avoidance, and increased spending on tax incentives.
The resources of the collection are destined to reforms in pensions and health, among others, part of the promises of the government program.
Source: Reuters
Source: Gestion
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