One thing that we need in Chile is to discuss and eventually agree on how we want our tax system to be in the future”.
Mario Marcel, Minister of Finance in Chile
A series of definitions was given by the Minister of Finance in Chile, Mario Marcel, in his first interview since he formally took office. “We have to worry that no one is left behind in the recovery process,” said the Secretary of State in a conversation with the director of Diario Financiero, Marily Lüders.
The former president of the Central Bank specified that tax reform, pensions and the development of the financial system will be some of the issues that he will focus on now that he has taken office, but he also referred to fundamental issues for both the national economy and the concerns of the Chileans and Chileans. Here are some of the key topics:
Tax reform: social dialogue in April
The Finance Minister recalled that President Gabriel Boric himself has insisted that he will promote “not only a reform, but a tax pact.” To achieve this, Marcel indicated that they are going to launch a social dialogue in the territories, but also with experts, companies and workers, which they hope will be concentrated mainly in April.
The objective, according to the authority, is “that we all have the opportunity to talk about the structure, logic and principles on which our tax system should be developed.” Specifically on wealth taxes, he explained that what is being proposed now is something “more elaborate” than what was initially called a “tax on the super-rich” after the social outbreak. “The better the income tax works, the easier it is going to be to apply the estate tax, but the less necessary it is going to be,” he said.
The meeting also addressed the collection objective, since the government program refined during the second round aims to collect 5 points of GDP in the four years of the administration, but Marcel clarified that “we have already advanced a few steps” when it was legislated on the Universal Guaranteed Pension, whose financing reached 0.66% of the Product.
mining royalty
Although one of the tools of the tax reform is the mining royalty, Marcel explained that “one has to be clear about the purpose” of a measure like this. He specified that this not only seeks to collect, but also has an impact on the activity to which it is applied. “The royalty is essentially a mechanism through which rents that are typical of an extractive activity are captured.”
He recalled that at this moment in Congress there is a project in process, which was discussed in the Chamber of Deputies and on which there was “a fairly deep discussion and analysis in the Senate.” “Seminars were organized, experts were invited, and from there an idea arose regarding the royalty that is different from the one that the Chamber of Deputies dispatched,” he said.
Marcel pointed out that the project today in the Upper House “involves an important advance, which would provide a good framework for a more definitive proposal on the matter”, and explained that it “proposes a tax structure that is much more consistent with the idea dynamic mining activity in the country, which can continue to generate investment”. Of course, he specified that “how precisely we can adjust to that proposal is something that we still have to finish working on.”
Fifth retreat: “everything has materialized”
Withdrawals of funds from the AFPs were once again in the spotlight after a second bill entered Congress this week to allow a new transfer from the pension funds, known as the “fifth withdrawal.” And although there are already several members of the government those who have rejected the initiative, now Marcel put his arguments on the table.
He pointed out that “what many described at the time as a campaign of terror, which were exaggerations, everything has been materializing, everything is in sight.”
He recalled that during the discussion of the previous withdrawals, many projections were made that were presented to the Legislature, and he lamented that “all things have been materializing.” He recalled that there has been higher inflation, the increase in long-term interest rates, the effect of the rate increase on mortgage loans -even faster than expected-, and the fall of the pension funds themselves. . “And now the impact on people’s pensions is also materializing.” The former president of the Central recalled that many times the subject of withdrawals is spoken of “as an aid”, but he clarified that this is not support from the State, nor from the administrators. “It’s self-help and it comes at a cost later in having a lower pension in the future.”
GDP “implausible”
The projection that this year the national economy would grow 3.5%, the last one made by the previous government, is seen as ambitious these days. On Wednesday, without going any further, the market once again lowered its outlook for the national GDP and now forecasts an expansion of 2.6% this year, according to the average of LatinFocus Consensus Forecasts.
Something in which the current head of the Treasury seems to agree, who in fact, in the seminar described as “not very plausible” the figures given by his predecessor. “Figures like those suggested by the previous government, it seems to me that they are not very consistent with the adjustment that the economy has to make this year to control inflation.”