SANTIAGO, (Reuters) – Chile will gradually eliminate general import tariffs by 2015, Finance Minister Felipe Larrain said yesterday, detailing a proposed sweeping tax reform aimed at helping fund an education overhaul.
President Sebastian Pinera, in a nationally televised speech late Thursday, laid out plans for broad tax changes that raises levies on companies, while cutting taxes on individuals.
The general import duty will be reduced from the current 6 percent to 4 percent in 2013, to 2 percent in 2014 and will be eliminated completely in 2015 under the proposed changes.
“With this we’ll become one of the few countries in the world – there are other countries like Hong Kong or Singapore that have a similar situation – and the only one in Latin America with no general import duty,” Larrain told reporters at the Presidential Palace in Santiago.
Chile already has trade agreements with the vast majority of its commercial partners, such as China, the United States and the European Union, who either don’t pay duties or pay at a reduced rate for imported goods.
“Today Chile has a general duty of 6 percent (on imports). This duty is applied to some countries which don’t have free trade agreements with Chile,” Larrain said.
Chile was hit in 2011 by a surge of protests demanding better and free education, stricter environmental regulation and greater economic equality, helping yank down Pinera’s approval rating to a paltry 29 percent in March, according to pollster Adimark.
The overall proposed tax reform bill, which still needs congressional approval, would raise the income tax rate for companies to 20 percent, lower the stamp duty on credit and increase the annual tax take by $700 million to $1 billion.
Pinera said on Thursday that all of the additional revenue from the tax changes will be used for education.
