SANTIAGO (AP) — President Gabriel Boric suffered a heavy defeat on Wednesday in the Chamber of Deputies, which refused to deal with a tax reform that would increase revenue to finance other structural changes, such as pensions, health and l ‘education.
The project aimed to increase fiscal resources by 3.6% of gross domestic product in five years.
For the proposal to pass the first filter and enter the agenda of matters to be legislated, the project needed a simple majority of 78 votes out of 155 seats. But he received only 73 votes for, 71 votes against and 3 abstentions. Abstentions are added to refusals.
The Chilean government now has two alternatives to move forward: present the project to the Senate, where it would need two-thirds of the votes -33 out of a total of 50- then insist with the deputies. The second is to wait a year and resubmit it, as required by current legislation.
However, the ruling party and the opposition control the votes in the Senate equally, so it would be difficult for the government to approve its project, while among the deputies, those who are in favor of the government have a slight majority. .
The project was processed for eight months in the lower house and several working commissions were created to negotiate. 90 indications have arisen that amended articles relating to wealth tax, taxes on retained earnings and a fund of 500 million dollars have been created to encourage investment, among others.
Finance Minister Mario Marcel, very annoyed, declared that after the defeat of the government, those who evade taxes and those who advise taxpayers to avoid them will rejoice.
He said that without the collection expected with the tax reform, it will not be possible to increase the basic pension by about 50,000 pesos ($62) to reach 250,000 pesos ($311). He also stressed that the massive waiting lists in hospitals will not be reduced and more resources will not reach primary health care.
“We will, surely, also have a celebration of the big capitals” which will not be affected by the planned wealth tax, he added.
Behind the project’s defeat are the votes of the right-wing blocs, the center-right, some independents and some members of the populist People’s Party, which declares itself neither an opposition party nor a pro-government party. At the time of the vote, the pro-government deputies were absent.