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Latin America discusses taxing the super-rich to help with pandemic expenses

The taxing of the super-rich is a hot topic at the moment around Latin America. It is a region which has been severely affected by the coronavirus outbreak, resulting in significant consequences for its economies and state coffers.

While Argentina and Bolivia already approved measures to tax their super-rich, in other Latin American countries discussions are at different stages in regard to the idea of the wealthy contributing more towards to costs of the Covid-19 health crisis.

The initiatives being discussed by Latin American legislators have the support of the International Monetary Fund (IMF), who have indicated that the option of taxing the super-rich and large corporations “is on the table”.

In Argentina, the Solidarity and Extraordinary Contribution Act came into force in January 2021 and is expected to apply to around 12 thousand people with a declared net worth of over 2.5 million dollars. With this one-off measure, the Argentinean government expects to collect around 3 billion dollars, which will be used to finance medical resources for the pandemic, to support small businesses, and for school grants, among other uses. The regulation will have a progressive rate of up to 3.5% for those assets declared in Argentina, and up to 5.25% for those assets declared overseas.

In regard to Bolivia, an annual progressive net worth tax has been decided on – calculated on a Wealth Tax basis at a rate of 1.4% for those in possession of 4.3 to 5.7 million dollars; 1.9% for those who have between 5.7 to 7.1 million dollars, and 2.4% for those who have over 7.1 million dollars.

Discussions in the rest of Latin America are at different stages, below is a brief summary or where they are at:

  • Chile: The Chilean Congress is analysing a project to introduce a law for a one-off 2.5% wealth tax for those with a net worth of over 22 million dollars.
  • Colombia: The proposal being sent to Congress proposes a wealth tax on those with net assets of over 1.4 million dollars. The tax rate has still not been published.
  • Mexico: The governing Morena party proposes the introduction of a national wealth tax to collect around 4.9 million dollars to help with the costs of the health crisis. However, this goes against the will of the Mexican President, Andrés Manuel López Obrador, who is not in favour of raising taxes.
  • Peru: Taxing the super-rich has been a hot topic during the presidential campaigns in Peru. Veronika Mendoza is in favour of applying 1% tax on those with over 100 million dollars in assets. George Forsyth, another presidential candidate, is proposing the return of overseas capital through a tax amnesty programme.
  • Uruguay: The Uruguayan congress is debating a projected law that will apply a temporary 2% tax on the financial assets held by Uruguayans overseas.
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