Chilean Congress Approves Major Economic Reform Package

The Chilean Congress has approved a sweeping economic reform package, referred to as the megarreforma or the project of National Reconstruction, championed by President Jose Antonio Kafka. The legislation includes a gradual reduction of the corporate tax rate from 27 percent to 23 percent by 2029 and various incentives aimed at reviving investment and growth. The final hurdle for the bill was the Senate's approval of a mechanism to compensate municipalities for the loss of revenue resulting from property tax exemptions for adults over 65. This article passed with 27 votes in favor and 22 against.

Finance Minister Jorge Quiroz stated that the law will reopen Chile's doors to investment and entrepreneurship. However, the government intends to submit three suppressive vetoes this Wednesday regarding the right to be forgotten financially, the charging of interest on interest, and 30 day payment terms for small businesses. Additionally, the Constitutional Court is reviewing opposition challenges to provisions concerning environmental permitting and aquaculture concessions.

Center right sources frame the reform as a vital step toward national growth and a victory for investment. In contrast, center left sources and opposition mayors describe the municipal compensation mechanism as regressive and unjust. Critics argue that the formula disproportionately benefits wealthy communes such as Las Condes, Vitacura, and Lo Barnechea, while providing significantly smaller amounts to vulnerable areas like Cerro Navia and Lo Espejo.

To secure the final votes, Minister Quiroz reached an agreement with Senators Matías Walker and Sergio Gahona to finance the reconstruction of the Coquimbo region following severe weather. This agreement involves a technical table to determine funding needs through public resources and the sale of expendable state assets. Senator Daniel Núñez, representing a center left perspective, condemned this agreement as immoral blackmail and argued that it uses reconstruction as an excuse to privatize public goods.