Piñera rules out corporate tax cut

Chilean President Sebastián Piñera said a corporate tax rate cut will not be included in a planned tax system overhaul.

The announcement was made during his first state of the nation address since beginning his second term in office, in March.

The billionaire businessman, who on the campaign trail said he would cut business taxes, cited fiscal pressure behind the move to hold rates steady.

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Some analysts had said Piñera would struggle to cut taxes, especially since they have only recently been hiked and he does not enjoy an outright majority in either chamber of congress.

"Given the fiscal challenges we inherited and the scope and urgency of the pending social reforms and structural projects, I've decided to maintain the corporate tax rate," center-right Piñera said, according to a transcript of his speech.

His administration has already announced belt-tightening measures to reduce the country's fiscal deficit and the slow the pace of growth of the public debt pile.

"Fiscal responsibility is a huge asset of Chile that must not weaken or be forgotten," he said.

The tax system has undergone several major changes during the past two administrations. Piñera said his planned overhaul would create a tax system that will help boost investment and growth and create jobs while strengthening legal certainty and reducing bureaucracy.

Chile has a two-tier tax system with two tax rates: 25% in the attributed tax regime and 27% in the partially integrated tax regime.

Piñera, voted back into office in December after serving from 2010-14, said that he was also due on May 4 to submit to congress a bill that grants autonomy to the country's fiscal advisory council, part of the finance ministry's budget office Dipres.

PENSIONS

Pensions - or more precisely the small payments many Chileans receive - is a major topic in Chile. Piñera's predecessor, center-left Michelle Bachelet, introduced a reform package to congress toward the end of her term in office.

The reforms were not passed and Piñera, who acknowledges changes are needed, has announced plans to introduce his own bill. During his address, he said his measures would improve the system - but provided little detail.

"We will reform the pension system to achieve, in a progressive manner, that all Chileans have a decent retirement, via an increase in contributions, recognizing the efforts of individuals and respecting the rights of workers in the area of pension savings," he said.

He added that within the next 60 days he would submit to congress a bill that will permit self-employed workers and SME owners to access the pension and social security systems.

PRIVATE HEALTH INSURERS

Piñera said he would also reform the country's private health insurance, or isapre, system. Draft legislation, he said, would focus on areas such as preexisting condition rules, access, and costs. Private health insurers, among other health system players, must also work on a universal health plan, a compensation system, and a portal that allows users to compare prices charged by isapres, he said.