Chile. — The Congress of Chile approved on Tuesday almost all the remaining modifications to a broad tax and economic reform package promoted by President José Antonio Kast, which represents a legislative victory for the conservative leader and his efforts to stimulate growth in one of the wealthiest nations in Latin America.
Tuesday’s vote comes at a time when Kast, who took office just over three months ago, is struggling to revive a stagnant economy. The economy contracted by 0.5% in the first quarter of 2026 after several months of weak growth. Unemployment rose to 9.4% between March and May, its highest level since June 2021.
The legislation seeks to reactivate the Chilean private sector, boost job creation, and eliminate the fiscal deficit. It will gradually reduce the corporate income tax rate for large companies from 27% to 23%, exempt newly constructed homes from value-added tax, limit which new universities can participate in Chile’s free education program, and allow private companies to request compensation when environmental disputes delay investment projects.
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Last week, the Senate passed the bill, but modified some articles, returning it to the Lower House for a final vote. On Tuesday, lawmakers approved all modifications except one regarding compensation to municipalities for tax exemptions. To become law, the bill must still resolve this last, minor point.
“I hope that all political sectors work together so that the remaining problem can be resolved quickly,” he told reporters in the northern city of Copiapó, where he was overseeing the government’s response to the heavy storms.
Kast, 60, took office in March promising to combat crime and illegal immigration, while reducing public spending and boosting private sector revenue. His election marked Chile’s sharpest turn to the right since the end of the 1973-1990 military dictatorship, and he has pledged to return to the market-oriented economic policies of that era.
“The president’s efforts have been essentially focused on deepening and resuming the orthodox neoliberal model of the late 70s and early 80s,” stated political analyst Gilberto Aranda. “What existed before was a neoliberalism moderated by subsidies and other measures.”
