Tax reform 2022: "Deja vu"

Fernando Barros Tocornal

The centenary building of the state University of Chile is the venue for the social dialogues, where a friendly and professional team of government advisers receives dozens of organizations and people interested in contributing with their vision to the projected tax reform. Some expect an increase in collection and, with it, an increase in their budgets charged to the public treasury. Others want to see the great social works that could be carried out with the new resources.

The dialogues take place in a highly technical environment and there is no meeting between the taxpayers who will pay more taxes on their income or assets, and those who teach about equality and the urgent need to extract much more from the fruit of the work of those who carry the weight of successful ventures and of having deprived themselves of many pleasures to save and invest and expand their companies.

“In a global world, without restrictions on the mobility of capital, bad tax policies and excess against those who have legitimately formed their assets favor the loss of economic and human capital.”

The dialogue is short. The representatives of more than 2,000 companies, sectoral and regional unions and associations of entrepreneurs and job creators for millions of compatriots have 15 minutes to show the essential aspects of a modern tax system, the basic errors in the comparison of the tax system in our country with international benchmarks, and the loss of competitiveness and incentive to invest in Chile, which implies the rise of more than 70% of the corporate tax in just over a decade (contrary to the international trend). There is also no fear of repeating the historical drop in investment that the biased tax reform of Bachelet 2 entailed, of materializing the extraction of resources from the productive economy for the greater public spending promised in the government program, without a minimum commitment to efficiency and greater control over that fiscal expenditure.

It is of little use to warn that the growing regulatory costs, the new pension charges for the employer, the reduction of the working day by more than 10% while maintaining wages, contributions and surcharges on productive real estate, municipal patents, the The increase in legal fees, the costs associated with the lack of security and crimes against people and property, etc., etc., will make companies in Chile progressively less competitive, and will compromise the possibility of generating the jobs and economic growth that are required for the same programs and works that are proposed.

The authorities consider it sufficient explanation that the reform would only affect high net worth and accumulated profits, forgetting that those profits legitimately earned by the entrepreneur and businessman, and which were reinvested in the company, today are warehouses, industrial plants, machinery and working capital. Taxing them with new taxes means discouraging the development of our industry. And it is also not fair to punish entrepreneurs, athletes, artists, merchants and all those who have achieved success with their work and that of their families, and who, despite having complied with income or inheritance taxation, handing over part of what they inherited or won to the fiscal coffers, now they want to re-tax what they have not consumed and they want to extract from what has already been taxed from their assets.

In a global world, without restrictions on the mobility of capital, bad tax policies and excess against those who have legitimately formed their assets favor the loss of economic and human capital.

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