Political Risk Latin America Blog @PolRiskLatam

Piñera Pitches Mining Tax amid Miner Rescue

Posted in News and Articles, Political Risk by politicalrisklatam on September 8, 2010

by Levi J. Jordan for Americas Society/Council of the Americas, September 8th, 2010.

Buried almost 2,300 feet below the surface since August 5 and forced to share a 540-square-foot space in 93-degree heat, 33 Chilean miners await rescue. Meanwhile, above ground in Santiago, debate unfolds over safety regulations and taxing profits on an industry considered the backbone of the Chilean economy. The government of President Sebastián Piñera has introduced a bill with an eye to helping earthquake reconstruction by increasing taxes on the mining industry, already responsible for making Chile the world’s largest copper-producing country. But Congress already rejected a similar bill in July.

The Piñera administration unveiled this week the revised mining royalty bill, which could generate as much as $1 billion in revenue. The legislation would increase taxes on mining profits for the next two years by raising both the minimum tax rate (from 3.5 to 4 percent) and the maximum tax rate (from 7 to 9 percent). As much as 30 percent of the funds would be used to boost recovery of areas affected by the February 27 earthquake. In exchange for adopting the voluntary tax increases, Piñera’s proposal offers incentives such as government assurances of tax stability until 2018, when rates are slated to rise to between 5 percent and 9 percent. While rejection of a similar proposal earlier in the year was the first real political setback for the newly inaugurated president, his government now hopes to push through the revised bill before Chile’s bicentennial celebrations on September 17. Piñera, whose popularity has soared as a result of his government’s handling of the mine collapse, could make use of his newfound political capital to push through the revised bill. (continue reading… )

 

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