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Socialist Bachelet Wins Landslide Victory in Chile's Presidential Vote

Socialist Bachelet Wins Landslide Victory in Chile's Presidential Vote

Sunday, 15 December 2013 07:00 PM EST

Michelle Bachelet won a landslide victory in Chile’s presidential election today after pledging to increase corporate taxes to finance free education for all.

Bachelet, who was president from 2006 to 2010, had 62.2 percent of the vote with 99.6 percent of the ballots counted, according to Chile’s electoral service. Ruling-alliance candidate Evelyn Matthei had 37.8 percent. Both Matthei and current President Sebastian Pinera congratulated Bachelet, who is the first to win a second term since the return to democracy in 1990.

Bachelet, 62, won by the widest margin since at least the end of Augusto Pinochet’s dictatorship after promising $15.1 billion in extra spending during her term in response to three years of protests over the quality of schooling and hospitals. Matthei has said her rival’s plan jeopardizes 30 years of almost uninterrupted growth that has made Chile the wealthiest country in Latin America. Bachelet’s coalition won the majority of Congress last month, allowing her to carry out her proposed tax increase.

“Chileans are ratifying a project for responsible change, a project of transformation to improve the quality of life for everyone,” Alvaro Elizalde, Bachelet’s spokesman, told reporters after the early results were released. The victory “will guarantee that the fruits of progress reach everyone.”

Bachelet will come to power as policy makers at the central bank forecast slower growth for the second straight year in 2013. The Imacec, a proxy for gross domestic product published monthly by the central bank, expanded 2.8 percent in October from the year earlier, the slowest pace in more than two years.

While the Finance Ministry is forecasting expansion of 4.9 percent for next year, former central bank presidents Vittorio Corbo and Jose De Gregorio say that weaker copper prices and higher global borrowing costs could lead to growth of less than 4 percent.

Since 1983, Chile has averaged economic growth of 5.2 percent a year, raising income per capita to about $19,100, the highest in South America, according to the International Monetary Fund.

“Bachelet will run into a problem if the economy doesn’t grow at current levels and copper, mining and private companies’ income fall,” Jorge Errazuriz, a partner at BTG Pactual, said in a telephone interview from Santiago before the vote. “In that case, her tax reform won’t be enough.”

Bachelet denies she will put Chile’s economic success in jeopardy. During her previous presidency, dollar-denominated bonds returned 32 percent, three times more than under the current administration and more than the 27 percent gain on similar Latin American bonds, according to Bank of America Corp.

While Bachelet won by the widest majority since at least 1990, she also obtained the fewest ballots of any winning candidate as voter turnout declined.

Bachelet won less than 3.5 million votes, compared with 3.59 million Pinera won in 2009 and the 3.72 million she won in her first election victory in 2005.

“It’s not quite the mandate she wanted,” said Patricio Navia, a political science professor at New York University. “There isn’t a majority of Chileans that want radical changes, the majority stayed home and didn’t vote.”

Osvaldo Andrade, president of Bachelet’s Socialist Party, said today was for celebration. “We’ll talk about the abstention from Monday onwards,” he told reporters at Bachelet’s campaign headquarters.

Pinera said politicians would have to listen to those Chileans who voted and those that didn’t.

Carlos Cubillos, 20, said he voted for Bachelet in downtown Santiago today because he is applying for government assistance to buy a house and stands a better chance with Bachelet in power.

“It’s Bachelet who hands out bonuses and helps the poor,” said Cubillos. “Matthei is focused on the economy while Bachelet is focused on the majority.”

Bachelet plans to raise the corporate tax rate to 25 percent from 20 percent and end a 30-year incentive to reinvest profits that she says is being used to avoid taxes.

The changes will bring Chile more into line with its counterparts in Latin American, where Colombia has a corporate tax rate of 25 percent, and Peru and Mexico have 30 percent. Five years ago, Chile had a tax rate of 17 percent, half Colombia’s 33 percent.

© Copyright 2024 Bloomberg News. All rights reserved.

Socialist Party Candidate Michelle Bachelet won a landside victory in Chile's presidential election today after pledging to increase corporate taxes to finance free education for all.
Sunday, 15 December 2013 07:00 PM
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