Chile’s Congress Clears Major Path for Kast’s Tax and Economic Reform Package

Chile’s legislative body moved forward Tuesday with nearly all remaining provisions of President José Antonio Kast’s expansive tax and economic reform initiative, marking a significant legislative win for the conservative administration. The chamber’s approval brings the measure closer to enactment as Kast seeks to revitalize economic momentum in one of Latin America’s most developed economies.

The president faces mounting pressure to reverse economic deterioration after taking office just over three months ago. Chile’s gross domestic product contracted 0.5 percent during the first quarter of 2026 following an extended stretch of sluggish performance, while joblessness climbed to 9.4 percent between March and May—the highest point since mid-2021.

The comprehensive reform package targets private-sector growth, employment expansion and fiscal deficit elimination through multiple mechanisms. Corporate tax rates for major enterprises would decline incrementally from 27 percent to 23 percent, newly constructed residential properties would gain value-added tax exemptions, restrictions would apply to university participation in Chile’s tuition-free program, and environmental disputes affecting investment timelines would qualify private operators for compensation claims.

The Senate had previously endorsed the bill last week but amended specific provisions, necessitating a lower-chamber reconsideration. Lawmakers approved all revisions except one addressing municipal compensation related to tax incentives, leaving a single procedural matter before the legislation becomes binding.

Kast, 60, praised the legislative advancement during remarks in Copiapó while managing government response to severe weather. “I hope all political sectors will work together so the remaining issue can be resolved quickly,” he told reporters.

The president entered office in March pledging to intensify crime prevention, restrict unlawful immigration, curtail state expenditures and amplify private revenue. His victory represented Chile’s most pronounced rightward political movement since restoration of democratic governance following the 1973-1990 military regime, with commitments to resurrect market-driven economic frameworks from the late 1970s and 1980s.

Political analyst Gilberto Aranda characterized the strategy as fundamentally repositioning Chile toward classical neoliberal economics. “The president’s efforts have essentially been focused on deepening and returning to the orthodox neoliberal model of the late 1970s and early 1980s,” Aranda stated, noting prior iterations included regulatory safeguards through subsidies.

Finance Minister Jorge Quiroz asserted the overhaul would strengthen investor confidence, diminish regulatory obstacles to capital deployment and enhance global competitiveness of Chile’s taxation framework. “We are enormously satisfied,” Quiroz declared following the vote.

Left-leaning lawmakers signaled strong opposition, characterizing the measure as disproportionately benefiting corporate interests and affluent populations. Constanza Martínez, heading the leftist Broad Front coalition, accused Kast of disguising market-oriented priorities beneath campaign rhetoric centered on security and employment. “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,” she contended, with the coalition planning constitutional legal challenges.