Direct democracy: Corruption in one of the main parties of the Boric government poses new obstacles to tax reform in Chile

Political corruption affecting Chile on a broad front, due to the transfer of money from the Ministry of Housing to the Fundación Democracia Viva, linked to the ruling party Revolución Democratica (RD), has reached one of the main projects of the government of Gabriel Boric: the tax reform. The prosecutor’s office is investigating 426 million pesos (about $530,000) given to the trust by the housing ministry’s Antofagasta headquarters. By the way, it darkens the panorama of implementing tax increases in the South American country, one of the current president’s campaign promises. More than half his term — two and a half years into the administration — Boric is looking for financial agreement, That is, some kind of consensus on what Chile needs to do on economic matters to finance substantial changes like pensions.

The government’s tax reform plan was rejected by the Chamber of Deputies last March in its first act, and will reintroduce it to the Senate in July, after a series of talks with key players. President Boric announced this in his speech before Congress on June 1, but recent events have not helped Finance Minister Socialist Mario Marcel, who aims to reach an agreement with businessmen before going to the Upper House.

A lack of concrete proposals to boost growth and a weak economic situation – Chile will grow between 0.5% and 0.25% this year, according to the latest forecasts issued by the central bank – have held back the business sector. Willing to negotiate on tax hike Last week, the president of the Confederation of Production and Commerce (CPC), which unites the main functions of the country, Ricardo Muse, issued a public statement in which he confirmed that they are not available to support the tax increase: “Collect through. Tax increases or new taxes are not the right path, because it affects the growth potential of Chile. It prevents recovery,” he said.

contracts for $530,000

The case is somewhat complex and new information is emerging daily. Each ministry has a regional ministerial secretariat called Ceremi in each of the 16 regions into which the Chilean territory is divided. Seremi de Vivienda, in the Antofagasta region in the north of the country, was led by DR militant Carlos Contreras, who was a close adviser to Catalina Pérez of the same party. In the process of his position, Contreras directly donated 426 million pesos (about $530,000) to the Fundación Democracia Viva, which is headed by the lawmaker’s partner, Daniel Andrade. The money is said to contribute to helping vulnerable settlements in the region, which has been hit hard by housing problems.

This reason led to the departure of Contreras, who signed the controversial contract. The Vice-President had to suspend his post as Vice-President of the Chamber of Deputies. Late last week, the government asked him to resign Number two From the Ministry of Housing, Deputy Secretary Tatiana Rojas, DR Militar.

Now, amid a public money scandal, tax talks are problematic for the current administration. After learning the details of the cause, Mewes said, what happened with Fundación Democracia Viva “raises all fears about how the resources that the government can effectively collect will be restricted” and promises to make it more difficult to reach an investigation. Tax treaty. “Some time ago we explained to Minister Marcel the urgent need for a tax escalation mechanism to be linked to performance in public spending,” the business leader added.

Minister Marcel, who has toured the US and Canada, tried a new approach in the private sector. In a letter to the CPC, the public finance chief was open to discussing “concrete initiatives” with the union to support economic growth and the efficiency of public spending. “We believe that the refusal to discuss tax increases in light of the situation of companies will not prevent the CPC from cognizant of and giving its opinion regarding the creation of tax incentives for investment, regularization and productivity; changes in the taxation of high personal incomes; reduction of deductions and unjustified tax costs and elimination of legal loopholes that facilitate tax evasion. “. In the letter he raised the minister.

A case “just started”

Meanwhile, the issue was debated in Congress. Guillermo Ramírez, bench leader of the right-wing Union Democrata Independiente (UTI) party and a member of the House of Representatives’ finance committee, said in an interview that he believed it was “the final grave for tax increases.” will be kept. “The way public resources are being managed is a real disgrace and it is indefensible,” he argued.

But both sections of the ruling party and some technocrats have disputed the opposition and businessmen’s position. “It fits like a glove,” Socialist Party leader Senator Paulina Vodanovic said on Tuesday, referring to the plot affecting the broad front. Economist Joseph Ramos, an academic at the University of Chile, confirmed the same: “There is some populism in the opposition.” Economist Dante Contreras, a professor at the same university, said some Days ago said in EL PAÍS: “The right and businessmen in Chile to deduct from the tax reform is not healthy and does not see the long term.”

The prosecutor’s office, which investigates influence peddling, tax fraud and fraud of public funds, ordered a raid on the offices of Seremi de Vivienda de Antofagasta and the Santiago offices of Fundación Democracia Viva. Meanwhile, the State Security Council (CDE) is compiling information to determine a possible complaint, and Thursday is the deadline for the regulator to provide the information to the housing ministry.

Traditional right-wing party UDI was given Complaint for tax fraud and influence peddling An inquiry commission should be created in the Congress to determine the cause and the responsibilities of the opposition MPs.

But as Housing Minister Carlos Montes, a long-time socialist, advanced, the case is far from over. “It begins,” said the Secretary of State this Sunday, who yesterday visited Antofagasta in the north of the country. During his visit, he visited the camps where Democracy Viva carried out its interventions, checked on the ground the work carried out by the foundation and met with Christian Aguilar, the lawyer in charge of the case, to whom he presented new information. As confirmed by the same Secretary of State, at the same time, six people employed by the Foundation carried out support functions in the office of Ceremi de Vivienda in the region and in the Housing and Urbanization Service. The administrator is currently considering filing a criminal complaint.

Congresswoman Perez is still at the center of the hurricane. last night, The police raided his house. After his party described the scandal as a “political error”, the leadership of the political force decided to suspend its members and condemned the events without nuance. President Boric, meanwhile, called on his ministers to “expect” corruption cases: “We need to know what’s going on,” the president said from the south of the country, where he is visiting areas hit by major storms and floods. Last weekend was overflowing.