Chile's Congress has approved nearly all of a significant tax and economic overhaul package championed by President José Antonio Kast, moving the legislation closer to becoming law. The conservative leader, who took office just over three months ago, is seeking to revitalize a sluggish economy.
The legislation aims to stimulate the private sector, boost job creation, and eliminate the fiscal deficit. Key provisions include a gradual reduction of the corporate tax rate for large companies from 27% to 23%, exemption of newly built homes from value-added tax, and limitations on which new universities can join the nation's free tuition program. It will also allow private companies to seek compensation if environmental disputes delay investment projects.
Last week, the Senate passed the bill with modifications, which the lower house largely accepted on Tuesday. Lawmakers approved every proposed change except one concerning municipal compensation for tax breaks. This final, minor sticking point needs resolution for the bill to fully pass.
President Kast welcomed the congressional approval of his administration's signature economic initiative. "I hope all political sectors will work together so the remaining issue can be resolved quickly," he stated.
Kast's administration has focused on measures to curb crime and illegal immigration while reducing public spending and increasing private sector revenues. His presidency, marking a significant political shift to the right in Chile, has been characterized by a pledge to return to market-oriented economic policies.
"The president’s efforts have essentially been focused on deepening and returning to the orthodox neoliberal model of the late 1970s and early 1980s," said political analyst Gilberto Aranda. "What existed before was neoliberalism tempered by subsidies and other measures."
Finance Minister Jorge Quiroz expressed satisfaction with the vote, asserting that the reform will enhance investor certainty, streamline bureaucratic processes for investments, and make Chile's tax system more competitive.
However, opposition lawmakers have voiced criticism, arguing that the legislation disproportionately benefits large corporations and the wealthiest citizens. Constanza Martínez, president of the left-wing Broad Front coalition, stated, "It has become clear that all of José Antonio Kast’s talk about security, jobs and immigration was simply a Trojan horse to advance the project he truly cares about: cutting taxes for the richest Chileans."
The Chilean economy has shown signs of weakness, shrinking 0.5% in the first quarter of 2026 and seeing unemployment rise to 9.4% in the March-May period, its highest level since June 2021.