SANTIAGO, Chile — With three years left in his term, Chilean President Gabriel Boric is already facing doubts on whether he’ll be able to advance on any key reforms after receiving a crushing blow near his first anniversary as the world’s youngest leader.
The chamber of deputies rejected a tax bill on Wednesday that would have financed social programs to reduce inequality and boost social services — the key policies that swept Boric into office in the recent wave of leftist victories in Latin America.
Now the 37-year-old president has to decide whether to present the bill to the senate, where it will face even more opposition, or wait a year to try in the chamber of deputies again. More broadly, the defeat will embolden the opposition and raise questions about the political acumen of Boric’s team to bring progressive change to a country that’s maintained a business-friendly status quo for decades. The finance minister had expressed confidence that lawmakers would back the tax bill just days before.
“It is a very serious political error that puts in question the entire second year of his government,” said Kenneth Bunker, a political analyst at consulting firm Politico Tech Global. “It’s an unintelligible mistake. How (Boric) digs himself out of this hole is a real mystery.”
Chile’s stock market swung to gains Wednesday after lawmakers rejected the bill that included a wealth tax and an increase in levies on top earners.
The vote comes six months after Chileans rejected a new constitution backed by Boric that looked to enshrine a series of social rights, including greater autonomy for indigenous groups.
“If previously his government’s program depended on the new Constitution and after that on the tax reform, then it means that he won’t be able to fulfill anything in his program. It’s as simple as that,” said Mauricio Morales, a professor of political science at Chile’s Universidad de Talca.
Boric’s administration has announced that it wants ambitious reforms in pensions and health care. A separate bill that will increase mining royalties — opposed by the industry — is being discussed in Congress.
President Boric pointed his finger for the defeat to the opposition. “When the country starts to show signs of a recovery, once again there are those that want to keep things unchanged,” Boric said in a speech on the government’s Twitter account. “It seems that the goal for some is to damage the government. Instead they hit millions of Chileans that want a country with more justice.”
The tax bill fell five votes short of the majority required for approval. Some left-wing legislators such as Pamela Jiles, an ideologue of the series of early pension withdrawals, left the room at the time of the vote. Also, some deputies linked to the populist Partido de la Gente voted against it. It is not clear why the government ever counted on their support.
“Surprised. Why did the government put the tax reform to a vote if they didn’t have the votes secured?” said Axel Callis, a pollster and political analyst, on his Twitter account.
The rejection stoked speculation that Boric will announce more cabinet changes. After the constitution rewrite was rejected in September, he appointed a new interior minister and a key negotiator with Congress from centrist parties, removing people from his own more left-wing alliance.
The change followed a series of blunders from inexperienced ministers, but it didn’t stop Boric’s popularity from falling as low as 25% in November and January, according to the polling agency Cadem. It has since rebounded to 35%.
The vote is also a defeat to Finance Minister Mario Marcel. The former central bank chief has been one of the highest rated ministers in Boric’s cabinet. Marcel showed few signs of contrition after the vote and pointed at the opposition.
“It is bad news for citizens who wanted a fairer tax system,” Marcel told reporters. “We will re-evaluate this whole situation with the president to see how we move forward with the government’s agenda.”
(With assistance from Matthew Malinowski.)
