Santiago, Chile (EFE).- The Chilean Senate approved the final outstanding article of the controversial tax and economic mega-reform pushed by José Antonio Kast’s government on Tuesday.
However, the legislation still faces hurdles, including executive vetoes and constitutional challenges currently pending before the Constitutional Court (TC).
With 27 votes in favor, 22 against, and one abstention, the Senate approved a formula to compensate municipalities for the reduction in property taxes on primary residences for individuals over 65. This mechanism has sparked division among local governments.
The provision requires the National Treasury to transfer compensation funds to each municipality to cover the approximately 190 million dollars that local coffers will lose due to the property tax reduction.
The government’s proposal earmarks 110 million dollars for the Municipal Common Fund (FCM) and direct reimbursements of 80 million dollars to individual communes. However, opposition and independent mayors argued during the debate that all funds should go to the FCM, advocating for a distribution strategy targeted to each commune’s specific needs.
