October 7, 2013 / 4:43 PM / 4 years ago

Chile presidential favorite Bachelet vows tax reform in first 100 days

By Anthony Esposito
    SANTIAGO, Oct 7 (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.
    
    WAIT AND SEE ON ENERGY
    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)

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