Chile's world-leading copper industry rejects lawmaker bid to hike taxes
Left-leaning opposition lawmakers in Chile have called for higher taxes on the copper mining industry to help underwrite social programs and stimulus amid the coronavirus crisis. Those calls - including a direct tax on sales - have gained impetus in recent weeks as copper prices hit a decade-long high.
Diego Hernández, president of Chile’s National Mining Society (Sonami), opposed the higher taxes and Reuters that the industry had hit its limit in terms of tax burden. He defended the existing system, which he said taxes miners’ operating margins at a rate that increases proportionately alongside rising prices.
The copper industry is a mainstay of the Chilean economy.
Hernandez said a recent study by Chilean Copper agency Cochilco showed that 11 of 21 mines reviewed are already suffering from prohibitively high operating costs, and that additional taxes could cause some to fold.
“We have reached a limit, at which we can still survive,” he said. But he warned that projects in the country’s current portfolio would likely fall by the wayside should taxes increase.
Hernandez told Reuters the legislation was also unconstitutional. Opposition lawmakers have proposed a constitutional reform to pave the way for the bill’s passage. Such changes, however, require a large majority.
Lawmakers have proposed changes to Chile’s mining tax scheme several times since the current regime was established in 2011, but they say this time is different.
“More than 3 million Chileans have no savings in their pension plans,” said lawmaker Catalina Perez, who sponsored the constitutional reform to facilitate the tax hike on copper sales. “The costs of the crisis (must be paid) by those who profit from what is ours.”