Chile seeks to hike copper mining royalties to fund social programs – Reuters

The Chilean government plans to increase the copper mining royalties on companies that produce more than 50,000 tonnes annually to raise funds for proposed social programs and reforms, Reuters reported July 1, quoting Finance Minister Mario Marcel.

"This means an increase in revenue from royalties, an increase in state participation in mining income," Marcel said in the report. "But also ensuring the mining sector has enough income to encourage investment."

According to Chile's treasury department, the plan is composed of an ad valorem tax between 1% and 2% for companies that produce 50,000 tonnes to 200,000 tonnes of fine copper annually and a rate of 1% to 4% for companies that produce more than 200,000 tonnes per year. There would also be a rate of 2% to 32% on profits for copper prices between $2 and $5, Reuters reported.

These components vary depending on the copper price. Meanwhile, the current system will be maintained for smaller copper producers, the report said.

In addition, the proposed bill will raise taxes on high-income earners and implement a new wealth tax for citizens owning more than $5 million in assets.

Chile has a tax collection rate of 20.7% of GDP, below the Organization for Economic Cooperation and Development's median of 34.7%, Marcel said, as quoted by Reuters.

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