Chilean Finance Minister Felipe Larrain announced a tax reform to simplify the national tax assessment system on the first day in office of the new government.
Santiago de Chile, Chile (03/12/2018). The announcement released on Sebastian Pinera's first day of his second non-consecutive term as president on first Meeting of the Cabinet Council.
Sebastián Rodríguez/Presidencia Chile/Lana (03/12/2018)
Larrain said they have been discussing the reform for some time to make the tax system more user-friendly to the public, and details of the agreement will be revealed later.
The announcement released on Sebastian Pinera's first day of his second non-consecutive term as president and Larrain was also his finance minister during his first term from 2010 to 2014.
"We are in a period of tightness, as unquestionably," said the minister, adding that the fiscal situation is different from eight or four years ago since levels of public debt has doubled. "What is needed is to begin certain austerity measures, and then see how to reassign resources."
The economic authority said the country's accounts were suffering from a structural fiscal deficit of 2.1 percent of gross domestic product (GDP), not 1.7 percent as stated by the former government in January.
Former President Michelle Bachelet, who was the president of Chile from 2014 to 2018, had began a tax reform which sought to raise taxes on the rich in order to finance other reforms.
"If we have to tighten our belts, those of us who work in the public sector will do so," said Larrain.
Despite the scenario revealed by the minister, the central bank's survey on economic expectations raised growth predictions for 2018 from 3.2 to 3.5 percent, and to 4 percent in 2019.