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Millionaire Wealth Tax Gains Support in Latin America

(Bloomberg) – Initiatives to tax the rich are gaining support across Latin America, the world’s most unequal region, as it struggles to recover from its worst recession in two centuries. In recent months, lawmakers from Chile and Mexico have proposed taxes based on a person’s net worth, as well as one of the favorites to be the next president of Peru. In the coming days, Colombia’s Ministry of Finance will send a proposal to Congress for a new wealth tax, while Argentina and Bolivia have already approved similar measures last year, after the pandemic sent the economy of the region into a deep recession, public debt rose to 79% of gross domestic product, the highest level in decades, affecting tax revenues. Under these circumstances, the idea of ​​getting the rich to cover the costs of COVID-19 has gained momentum in some political circles.The region is not alone: ​​The International Monetary Fund has said that a tax on the wealthiest people and corporations is “One of the options that are on the table.” New York State, home to the world’s financial center, is also planning to temporarily increase taxes on millionaires. Estate taxes have gained popularity since French economist Thomas Piketty described growing inequality in his 2014 bestseller, “The Capital in the 21st Century, “in which he advocates a progressive annual tax on capital to reduce the gap. Under Argentina’s new tax, anyone with assets over US $ 2.2 million must pay a one-time” extraordinary tax. ” before April 16. The tax ranges from 2.25% to 5.25%, depending on the size of the fortune and whether the assets are held at home or abroad, but initial results show that taxing the rich is easier to say what to do: as of March, the government has only managed to collect 6.1 billion pesos (US $ 66 million) from wealthy Argentines, well below the 300 billion that legislators had projected when the tax passed through Congress at the end of Last year, Argentina’s tax authority postponed its deadline and changed the rules, offering payment plans for the wealthy to send their checks. An Argentine technology executive received a ruling in his favor from a judge and will not have to pay the tax. For their part, business chambers warned that the tax will discourage investment and hiring, but well-designed wealth taxes, such as those in Norway and Switzerland, can boost tax revenues and reduce inequality gaps without putting in risk employment and investment, according to Fernando Velayos, a tax policy consultant in Spain and a former researcher at the Inter-American Development Bank.Here are the wealth taxes currently on the table in Latin America: Chile Wealth currently being considered by Congress proposes a one-time tax of 2.5% on the wealth of individuals with fortunes of $ 22 million or more. The legislation will still face many steps before it becomes law. It still needs to go through the Chamber of Deputies for a vote and then to the Senate. Chilean President Sebastián Piñera, himself a billionaire, could seek to block the tax, asking the constitutional court to review it.Colombia The Ministry of Finance has said that in the coming days it will send a bill to Congress that includes a tax on the equity that individuals must pay on net assets above a threshold of 5,000 million pesos (US $ 1.4 million). The tax rate has yet to be made public. Colombia first levied such a tax in 2002, as an emergency measure to strengthen the army at a time when the Marxist guerrillas were nearing their peak. Since then, estate taxes have been renewed every few years. The most recent tax of this type, approved in 2018, raised around 1 trillion pesos last year, equivalent to 0.1% of gross domestic product. Peru Presidential candidate Veronika Mendoza has been in favor of applying a tax of 1 % to people with more than US $ 100 million in assets. In the polls, Mendoza is competing for second place before the April 11 vote. Another candidate, George Forsyth, said he would encourage wealthy Peruvians to repatriate their money held abroad under a tax amnesty program.Mexico The ruling party lawmaker Alfonso Ramírez Cuéllar proposed a one-time tax that would affect 160,000 people and raise up to 100,000. million pesos (about US $ 5,000 million), according to an interview he gave to a newspaper in March. The legislator said the measure, which is part of a package of fiscal reforms, may not be presented until August. Uruguay Opposition lawmakers in Montevideo on Tuesday presented a bill to apply a temporary 2% tax on financial assets held. of Uruguayans abroad. The bill faces major difficulties with the ruling coalition of President Luis Lacalle Pou, which has been pro-business and controls both houses of Congress.Original Note: Millionaire’s Tax Initiatives Gain Support Across Latin AmericaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source. © 2021 Bloomberg LP