Chile presidential favorite Bachelet vows tax reform in first 100 days

Reuters News
Posted: Oct 07, 2013 12:46 PM
Chile presidential favorite Bachelet vows tax reform in first 100 days

By Anthony Esposito

SANTIAGO (Reuters) - Chilean presidential front-runner Michelle Bachelet promised on Monday to tackle tax reform within the first 100 days of taking office, aiming to increase corporate taxes to pay for an education overhaul.

Center-left Bachelet, who was Chile's first female president from 2006 to 2010, is well ahead in polls to win November's vote or a potential December run-off against a weakened right-wing candidate and a host of candidates from smaller parties.

"The big changes that we want to implement, mainly education reform, as well as the urgent matter Chileans face (in terms) of their pensions, require financial resources," Bachelet told a news conference as she outlined 50 promises she would make a priority in her first 100 days.

Bachelet's first presidential term was marked by market-friendly policies, but analysts say she appears to be pursuing a more left-wing agenda this time. The pediatrician and former head of international organization UN Women has pledged to create a state-run pension fund and overhaul the dictatorship-era constitution, as well as hiking corporate taxes.

Bachelet has said she would raise the corporate tax rate to 25 percent, from 20 percent currently. The average rate in Latin America in 2011 was 25.06 percent, according to accountancy firm KPMG.

But Chile's electoral system effectively prevents any one party from having a large majority in Congress and means Bachelet will likely have to cut deals with the right to push her reforms through.

Right-wing coalition candidate Evelyn Matthei has ruled out tax reform, saying such a move could compromise growth in the top copper exporter, which expects slower growth this year than last amid weaker global demand.

Incumbent President Sebastian Pinera's government pushed through some tax and education reforms last year after long months of nationwide student protests slashed his government's approval ratings and proved a hindrance to governance.

Critics said his reforms did not go far enough.


Bachelet gave little insight into her plans for energy policy, a closely-watched issue given a mounting power crunch in Chile's crucial mining industry.

A nebulous regulatory framework has left several major power generation projects in limbo and there is strong public opposition to large coal-fired plants and hydropower projects.

The document detailing Bachelet's campaign promises said details of her energy strategy, which aims to balance the needs of production against respect for the environment, would be provided after the election.

"We all know that Chile has an important energy deficit and that if we don't act with urgent and long-term measures our economy could be seriously impacted," the document said.

Industry analysts expect Bachelet to make liquefied natural gas the backbone of her energy policy in the next four years.

(Reporting by Anthony Esposito; Editing by Krista Hughes)