2026/03/16 | Andrés Pérez M., Vittorio Peretti, Andrea Tellechea & Ignacio Martínez
In the administration’s first weekend, President Kast and several cabinet members announced they will present a National Reconstruction Bill to Congress in the coming days that includes forty measures stretching across several areas. The legislative effort builds on other administrative ones taken over the past few days that plan on streamlining investment, audit the fiscal accounts, among others.
The National Reconstruction bill, as announced, would contain numerous tax-related measures that reduce revenues and boost private investment which had been expected to be presented in a tax reform on April 1, including a corporate tax cut for large firms (from 27% to 23%), property tax cuts for seniors, a transitory VAT cut on sales of new residential properties, the elimination of the 10% capital gains tax, a transitory lower inheritance tax, and an employment subsidy among others. Separately, the bill would increase fiscal resources available (roughly USD436 million, ~0.15% of GDP) for a transitory emergency reconstruction fund. The bill plans on constraining expenditure growth over the medium term by limiting free access to tertiary education (CAE system) to those below 30 years of age and stopping the phased-in access to higher income households.
Importantly, the bill also plans on reforming the environmental approval institution SEIA, a major bottleneck that has increasingly constrained investment over the past decade.
Local press suggests the bill is expected to be presented to Congress as soon as March 23-24. The Budget Office should present their view on the fiscal impacts of these measures along with the bill. Even though the political right has the presidencies of both houses, the governing coalition is slightly short to a majority in Congress, suggesting negotiations will be key to secure passage of the broad-based bill.
Finally, the Minister of Finance Jorge Quiroz stated in local media that he will sign an instructive on Monday January 16 ordering all ministries to reduce their expenditures this year by 3% (roughly USD3 billion), and another USD1 billion across ministries, which would take spending cuts this year to ~1.2% of GDP this year.
The Budget Office will deliver fiscal data for the end of February on March 31.