SANTIAGO, Chile — Less than four months into his term as Chile’s conservative president, José Antonio Kast has secured a critical legislative win, as the nation’s Congress has greenlit nearly all outstanding amendments to his ambitious, market-focused tax and economic overhaul. The approval comes as the conservative leader grapples with pressing economic headwinds that have slowed activity across one of Latin America’s most prosperous economies.
Kast, who took office in early March, inherited a prolonged period of stagnant growth: official data shows Chile’s gross domestic product contracted by 0.5% in the first quarter of 2026, extending months of lackluster expansion. Unemployment has also climbed, hitting 9.4% between March and May of this year — the highest jobless rate recorded in the nation since mid-2021.
The sweeping reform package, the cornerstone of Kast’s economic agenda, is designed to inject new life into Chile’s private sector, accelerate job creation, and eliminate the country’s persistent fiscal deficit. Key provisions include a gradual cut to the corporate tax rate for large firms, dropping it from 27% to 23% over time; a full value-added tax exemption for newly constructed residential properties; new restrictions on which higher education institutions can participate in Chile’s popular free tuition program; and a clause allowing private companies to pursue financial compensation when environmental regulatory disputes delay planned infrastructure and investment projects.
The bill first cleared the Senate last week, but upper house lawmakers made modifications to several provisions, forcing a return to the Chamber of Deputies for a final confirmation vote. On Tuesday, lower house legislators approved every adjusted article except for one minor provision outlining how municipal governments will receive compensation for foregone tax revenue from the package’s breaks. For the overhaul to formally become law, negotiators must now resolve this final outstanding sticking point.
Speaking to reporters from Copiapó, a northern Chilean city where he is overseeing the government’s emergency response to severe seasonal storms, Kast celebrated the legislative progress. The president urged across-the-aisle cooperation to speed up resolution of the remaining issue, saying, “I hope all political sectors will work together so the remaining issue can be resolved quickly.”
The 60-year-old leader campaigned on a platform of cracking down on rising violent crime and irregular migration, while also pledging to cut bloated public spending and unlock growth for the private sector. His election late last year marked the most dramatic rightward shift in Chilean politics since the end of the 1973-1990 military dictatorship, and Kast has explicitly promised a return to the market-centered economic policies that defined that era.
Gilberto Aranda, a prominent Chilean political analyst, noted that the reforms represent a clear departure from the tempered neoliberal framework that has governed the country for decades. “The president’s efforts have essentially been focused on deepening and returning to the orthodox neoliberal model of the late 1970s and early 1980s,” Aranda explained. “What existed before was neoliberalism tempered by subsidies and other social protection measures.”
Finance Minister Jorge Quiroz framed the overhaul as a critical step to restore investor confidence in Chile, cutting through burdensome red tape for new projects and making the nation’s tax code more competitive relative to regional peers. “We are enormously satisfied,” Quiroz told reporters after Tuesday’s vote.
Opposition lawmakers have pushed back hard against the package, arguing that it disproportionately benefits large corporations and the nation’s wealthiest households. Left-wing parties have already vowed to challenge the legislation before Chile’s Constitutional Court once it is enacted.
“It has become clear that all of José Antonio Kast’s talk about security, jobs and immigration was simply a Trojan horse to advance the project he truly cares about: cutting taxes for the richest Chileans,” said Constanza Martínez, president of the left-wing Broad Front coalition.