March 11, 2014 / 3:06 PM / 5 years ago

Factbox: Chile's incoming president Bachelet and her policies

SANTIAGO (Reuters) - Michelle Bachelet, who takes over the presidency of Chile for the second time on Tuesday, plans to spend $15 billion on ambitious reforms aimed at redressing steep income inequality.

Center-left Bachelet, who governed as Chile’s first female president from 2006 to 2010, won an easy victory in December’s election and takes over from the conservative Sebastian Pinera.

A moderate socialist, Bachelet has moved further to the left since the end of her first term, a shift that has coincided with massive protests for free and improved education in Chile over the past two years.

Bachelet is promising to hike corporate taxes to fund an education overhaul. She also plans a series of social measures that could shake up traditionally conservative Chile, including legalizing abortion in select cases and, perhaps, gay marriage.

Many of her policies also seek to undo the legacy of the 1973-1990 dictatorship of General Augusto Pinochet.

But she will have to wrestle with a tricky Congress and slowing economic growth.

Here are her main policy proposals:


- Gradually raise corporate taxes to 25 percent from 20 percent. Along with other tax changes, the increased take would be equivalent to 3 percent of gross domestic product (about $8.5 billion at current levels).

- Get rid of the FUT (Fondo de Utilidades Tributables), a mechanism that companies can use to gain tax exemptions on part of their profits.

- Reduce the maximum individual tax rate from 40 percent to 35 percent over the course of four years.

- Reduce the structural fiscal deficit from roughly 1 percent of GDP to zero by 2018.

- Seek a competitive exchange rate to boost exports.

- Increase financial oversight, reinforce norms against collusion, and advance towards incorporating Basel III capital rules agreed globally to make banks safer after the 2007-09 credit crisis.


- Reform Chile’s largely privatized education system, which critics charge unfairly favors the wealthy. The reforms will include working toward free higher education, ending state subsistence of for-profit schools, and opening more nurseries and pre-schools. The education reform will require a permanent reallocation of 1.5 percent to 2 percent of GDP.

- Create a state-run pension fund as an alternative to private funds.

- Spend $4 billion on new hospitals, build more health centers, employ more doctors and subsidize the cost of some medicines.

- Draft a new constitution to replace the one implemented under Pinochet in 1980.

- Reform the electoral system which generally guarantees the two biggest blocs dominate Congress, with neither having a large majority, while independents are under-represented.

- Decentralize power by allowing governors to be elected by local communities rather than be selected by the national government.

- Legalize abortion in cases of rape or risks to the mother or child’s health. Chile is one of only a few countries in the world where abortion is completely banned.

- Have an “open debate” on gay marriage to create a bill which would be sent to Congress.

- Try to strengthen links with other Latin American countries, not just those in the Pacific Alliance bloc.


- Boost mining industry chiefly by taming high power prices and improving the concessions system to encourage exploration.

- Seek to balance Chile’s rising energy needs with environmental concerns within the first 100 days.

- Bolster the state’s role in regulating the energy sector and strengthen environmental institutions.

- Boost the use of liquefied natural gas. Promote a coordinated system of purchases of “attractive” LNG volumes to find best-priced cargos.

- Continue to capitalize state-run mining firm Codelco.

- Bachelet’s policy program makes no mention of any plan to change mining royalties.

- Bachelet has not expressed her views on several unpopular resources projects, though she has indicated that a plan to build the 2,750-megawatt HidroAysen hydropower project could be scrapped unless plans are amended.

Compiled by Santiago bureau Editing by W Simon

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