Chilean President Sebastian Pinera announced his US$8.43 billion plan on Friday to finance Chile’s reconstruction with tax increases, new government debt and withdrawals from the country’s copper savings.
Pinera announced the four-year plan from the docks of the ravaged port of Coronel, which was hit by a tsunami after the Feb. 27 earthquake.
The president said one phase of his government’s response was ending, as basic services returned to the affected southern regions and families recovered the remains of the nearly 500 dead. But the sense of urgency remains.
“We are now racing against the winter rains,” Pinera said in imposing a deadline to provide 40,000 temporary shelters by June, when winter arrives in the southern hemisphere.
The natural disaster will cost Chile an estimated US$30 billion, more than two-thirds of which will be shouldered by the private sector and insurance companies.
Pinera, who assumed office on March 11, proposed a temporary increase of the corporate tax rate and copper royalties paid by the country’s major mining operations, as a well as a permanent increase of tobacco and high-end real estate taxes.
He did not specify how much local and foreign debt Chile would issue or how much the country would draw on the sovereign wealth fund that has grown to US$11 billion with the copper boom in recent years.
The proposed taxes would raise some US$3.14 billion for the four-year plan, and Pinera has promised cuts in government spending to provide an additional US$733 billion during that period.
The president also has suggested that Chile could sell state-owned businesses not tied to its core mining concerns, such as its 40 percent interest in the energy company Edelnor, valued at nearly US$900 million.
Pinera’s first major legislative proposal opened cracks in the political unity that marked his first month in office.
The center-left opposition accused the billionaire president of “privatizing the reconstruction” after he proposed tax incentives for private donations that would add roughly US$155 million to public recovery efforts.
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