© Andres Perez
President-elect Gabriel Boric and President Sebastian Piñera at La Moneda, on December 20.
“Bread for today and hunger for tomorrow” was the veiled warning that the Minister Secretary General of the Presidency gave him on Monday, Juan José Ossa, to the president-elect Gabriel Boric, following the idea of a group of opposition deputies that added a tax to the high patrimonies within the project that eliminates tax exemptions to finance the new Universal Guaranteed Pension (PGU) prospered.
Even if The Chamber of Deputies and Deputies approved this initiative in the first step with unanimous support, including the so-called tax on the “super rich”, with the favorable vote of RN, the UDI and Evópoli, in the case of the right-wing parliamentarians there was behind a strategy endorsed by the Executive.
The objective was not to trap the discussion so that the new pensions begin to be paid in February and to endorse the future Boric administration with the responsibility of stopping the new tax for natural persons with high net worth.
Although the tax on the “super rich” is an idea that was born from the PC and the Frente Amplio (in fact, it was on Beatriz Sánchez’s program and the communist deputy Camila Vallejo presented a constitutional reform in that line to overcome the obstacles of the current Fundamental Charter), in this case, the measure was installed by means of a simple law, which openly ignored the exclusive power of the President of the Republic to modify the tax system. In fact, in the opposition, senators and deputies admit that it was only a maneuver to pressure the Executive, in view of the concern regarding the lack of financing for pensions.
However, the Piñera government was also complicated, because some RN deputies had certain sympathies for the measure that points to great personal fortunes. Even yesterday, the deputy RN Eduardo Durán called on the government not to oppose this tax.
To face this discussion, initially, the RN bench, represented by Francisco Eguiguren and Miguel Mellado, asked for a separate vote on the tax on the “super rich.” However, at the request of the government, this possibility was finally withdrawn and the project ended up being unanimously approved as a closed package (except for two points requested by the UDI, which were not successful either). In the end, the bill, with the controversial amendment, passed in its entirety to the Senate, which will begin its review this week.
Case goes to TC
In any case, the ruling party’s strategy did not imply accepting defeat. It was just a tactical play betting on reversing the controversial point in future instances. Thus, Minister Ossa, and the Minister of Finance, Rodrigo Cerda, presented constitutionality reservations (in view of the violation of presidential powers), so that if the tribute to large fortunes were to pass the Senate fence, it would remain as alternative an eventual challenge before the Constitutional Court (TC).
That requirement would become an uncomfortable gift from the outgoing Piñera administration to the new Boric government.
In fact, it might be one of Piñera’s last executive measures in La Moneda, and given the recess of the courts in February, it is likely that the resolution of that process in the TC will not be settled until following March 11. Once the initiative is dispatched by Congress, La Moneda has one month to appeal to the Constitutional Court, which, for its part, has to resolve in 10 days or in 20, if it requests an extension to rule.
If the hearing of the case extends beyond March 11, the decision to maintain or withdraw the requirement would be the responsibility of Boric.
Added to this is an additional problem. In March, four TC ministers complete their mandate. Two must be appointed by Congress before March 6 and another two by the new President following March 16. Additionally, the appointment of alternate ministers is pending. That is, an eventual sentence might be resolved by magistrates whose names are not even known.
The reading that exists in the ruling party is that establishing a tax change through a simple law sets a delicate precedent for the future administration, since a circumstantial majority might even promote a reduction in taxes on popularly demanded issues, for example, on matters fuel, books or VAT, in general.
In a Congress virtually tied as it will be from March, the right is 10 votes in the House from having a majority. In the case of the Senate, the margin is narrower, since RN, the UDI, Evópoli and the Republicans only need one vote to prevail.
“The defense of the exclusive initiative is decisive for the political stability of any government. In many cases, this is very difficult, because it often struggles with ideas that are tremendously popular, but that can produce very negative effects in economic or administrative spheres. The Executive, above all, has to show permanent courage and endure the pressure. And our government has done so. The future government must have that courage or it will have many problems, “says the undersecretary general of the Presidency, Maximum Pavez.
According to the professor of Administrative Law at the University of Chile Luis LambApproving a tax change through a simple law without government sponsorship sets a delicate precedent and recalls that the late President Salvador Allende defended this point once morest some initiatives promoted by Congress. “The President has the exclusive initiative in matters of taxes. That comes before the Constitution of 1980. It was in the first debates of the Constitutional Court between 1971 and 1973. It is a delicate matter, which significantly affects the presidential power. Altering this implies not only raising taxes, but also a possible decrease ”, he points out.