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Original article: ¿Quién paga la cuenta del plan neoliberal de Kast?

By Leopoldo Lavín Mujica

Last Thursday, President José Antonio Kast used his first national broadcast to unveil what he termed a «National Reconstruction Plan»: 43 proposed measures aimed at revitalizing the economy, creating jobs, and rebuilding areas devastated by wildfires. However, many see it as nothing more than a publicity stunt, raising an uncomfortable question that those in power often avoid: if the government collects less revenue, who will fund hospitals, schools, and subsidies that currently support millions of Chileans?

Here are three key figures to understand the implications:

• The corporate tax rate would decrease from 27% to 23%.
• In the long run, experts estimate only 40% to 50% of the lost revenue is recovered, leaving the remainder to vanish from the public budget.
• Currently, unemployment in Chile stands at 12%, and half of the workforce earns $600,000 or less (Fundación Sol).

The Heart of the Plan: A Lifeline for the Wealthy

The central focus of the proposal is not the reconstruction of Ñuble or affordable housing, but rather a gradual reduction of the corporate tax from 27% to 23%. Large corporations would see a 1.5 percentage point cut by 2027, followed by another similar cut in 2028 and a final point reduction in 2029.

This also includes the so-called «re-integration of the tax system,» which allows business owners to fully deduct from their personal taxes what their companies have already paid. In effect, this means that corporate profits will be almost entirely tax-exempt.

The government argues that this will encourage investment. However, former economy ministers caution that data shows only 40% to 50% of lost revenue is typically regained in the long term, while the rest is absorbed by the market and never returns to the public.

“Focusing incentives on tax cuts without clear compensations could exacerbate the deficit,” warned Alejandro Ferreiro, former Minister of Economy under Michelle Bachelet.

What About Social Programs? The Complicit Silence of Kast’s Plan

Chile currently allocates over 2.2 trillion pesos annually just for university tuition relief. We have a public healthcare system that serves the majority of the population, and we finance housing subsidies, solidarity pensions, and numerous programs for the most vulnerable sectors. All of this is funded through taxes. Instead of reducing taxes for wealthy business owners, we should be increasing them.

If the government collects less, as several economists warn, the budget for healthcare, education, and affordable housing will suffer severe cuts.

Former Undersecretary of Finance, Micco, was clear: «The tax changes in the proposal are further pressuring the deficit,» adding that «I do not see how the drop in revenue is offset.»

Matías Acevedo, former Budget Director, urged against adding more risks to the fiscal balance. No one from the government responded with concrete figures, and the Autonomous Fiscal Council, established to safeguard public accounts, was not even consulted.

Measures «For All» that Only Benefit a Few

The plan eliminates property tax for seniors on their primary homes. It sounds altruistic, but former Minister Ferreiro labeled it «regressive»: in practice, it benefits owners of high-value properties more than the middle class. Seniors without property—the most impoverished—receive nothing.

The one-year VAT exemption on new homes aims to relieve a stock of 100,000 units. Who is purchasing new homes today in Chile? Not families living in camps, nor low-wage workers, or even recently graduated couples. It’s the middle-upper class and real estate companies. A boon for the affluent. Once again, it’s the same old story.

“The intent is to cut taxes without compensation… which ultimately results in fewer resources for those in greatest need,” the Socialist Party denounced.

The Myth of Trickle-Down: A Neoliberal Scam with History

The logic behind Kast’s plan has a name in economics: trickle-down economics. The premise is that if the wealthy pay fewer taxes, they will invest more, create jobs, and wealth will «trickle down» to others. This theory has a history of failures spanning decades. It’s an outdated idea that has consistently yielded results—except for the impoverishment of the populace and greater concentration of wealth.

Analyst Alejandro Urzúa from UNAB acknowledged that the plan is «not a silver bullet» and that, in its initial phase, benefits are concentrated among the already wealthy. Large corporations will often use their increased liquidity to buy back shares, pay dividends, or accumulate profits—not to build factories or hire workers. This reflects the capitalist logic of a system in crisis that deepens class struggle.

Even the ASIMET (industry union) admitted that «tax cuts alone do not guarantee sustained investment growth.»

The Question Power Won’t Answer

Kast’s plan aims for Chile to grow by 4% by 2030 and for unemployment to drop to 6.5%. Many economists deem these targets unrealistic. Even if they were achieved—which would require impossible political discipline in a fragmented Congress—the path to getting there involves years of reduced tax revenue.

What happens in the meantime with public health waitlists? What about housing subsidies? What about pensions? The plan doesn’t address these issues. This silence isn’t coincidental; it’s a political decision. First, the market; then—perhaps—the state. Ultimately, it is always the lower classes transferring resources to the wealthy.

“It’s an ambitious goal. We must ensure we do not add more risks to our fiscal balance,» said Matías Acevedo, former Budget Director of Piñera II, in the typical neutral language of the neoliberal technocrat.

The Neoliberal Dream and the Asleep Social Movements

Kast’s plan is not an ideological accident; it is the clearest expression of a vision where the state must shrink in order for the market to grow. It is pure, unadulterated neoliberalism.

In summary, this is essentially a government of the corporate oligarchy and large national and international corporations that have put Kast at the helm to safeguard their profits, dismantle what little remains of the welfare state, and ensure that it is always the lower classes who pay for the crisis with their work, health, and future.

Let’s be clear: during Boric’s presidency, social movements—the student movement, women’s rights advocates, and especially labor organizations—have remained largely quiet and subdued. The long-awaited branch negotiation law, a historic demand of workers, was not passed. That cannot happen again.

Today, in the face of Kast’s neoliberal plan, those movements must engage in self-reflection, regain initiative, and take action. This is a sine qua non condition for any genuine change and to put a stop to this neoliberal policy that only benefits the oligarchy.

In urgent times like these, the task is clear: mobilize to exert pressure on the political elite. Let Congress understand that the people are not asleep. Only in this way can we halt Kast’s neoliberal plan.

Leopoldo Lavín Mujica

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