Protesting students have found unlikely allies in the International Monetary Fund (IMF). The IMF released a report on 6 October arguing that Chile should consider raising taxes to meet social needs. Students argue that a tax reform, where the rich pay more, would fund their main demand for free education for all. The debate is now moving to congress, where it will be heated. Even approval of the budget is at stake.
In its Regional Economic Outlook for the Western Hemisphere - Shifting Winds, New Policy Challenges - the IMF argued that Chile needed to raise revenue to address “large infrastructure and social needs, including still high levels of income inequality”. It also contended that “particular consideration should be given to raising direct taxes by bringing corporate tax rates to international standards and reducing generous tax concessions and incentives.” Chile's finance minister, Felipe Larraín, expressed “surprise”, noting acerbically that “this sort of recommendation has been made in the past with much more analysis”. Implicit in Larraín’s comment was the suspicion of partisan influence in the production of the report: Chile’s former finance minister, Nicolás Eyzaguirre, under the last government of the left-wing Concertación, is the current director of the Western Hemisphere Department of the IMF.
The now rudderless Concertación, determined not to be marginalised from the political debate and to capitalise on the government’s travails, has conditioned its approval of the budget in congress on the debate of a tax reform that would guarantee free higher education for most students. Citing the IMF report, Senator Jaime Quintana of the Partido por la Democracia (PPD) claimed that “Tax reform is necessary and those who oppose free education do so because they oppose reform, because for many in the high wage sectors in this country it is much easier to pay the fees of their children instead of paying [higher] taxes.
Referendum result ruffles Piñera
Minimal number crunching is required to show that these are troubling times for President Sebastián Piñera. More than 1m people voted in an unofficial referendum staged by the teachers’ union Colegio de Profesores on 9 October to assess support for free education - the central demand of students, whose protests to achieve this end have now entered their sixth month. The vast majority expressed support for the students’ cause. Piñera’s approval rating is hovering around 25%, which equates to just over 2m of those eligible to vote.
Jaime Gajardo, the president of the Colegio de Profesores, claimed that just over 1m people voted in the referendum; 340,000 of them over the Internet. The questions asked voters whether they favoured free quality public education guaranteed by the state; whether they thought profit from public funds should be prohibited in education; and whether “binding referendums” were necessary to resolve “fundamental problems of a national character”
Gajardo claimed that support for the students’ goals was in excess of 90%. This was less surprising than the size of the turnout which, Gajardo conceded, had exceeded all expectations. Indeed, it was so large that questions were raised about how fair the vote was; whether the ability to vote on the Internet had allowed people to vote several times.
The government was dismissive of the referendum but, despite the vote’s imperfections, it is clear that the students have the initiative. The government now seems intent on discrediting the students. The government spokesman, Andrés Chadwick, said the student movements had been “taken over, co-opted and led by the most radical groups, the most intransigent and ideologised”. In reality it is the same leaders that have been there the whole time; the big difference is that they are much more popular with the general public now and the government has lost patience with them, and is trying to denigrate their image to reduce support for them.
Chadwick was venting the government’s frustration after leaders of the student movement Confech pulled out of talks and called yet another protest action for 18 and 19 October. One of its leaders, Camila Vallejo, said that the government was in fact being intransigent by stubbornly presenting “the same proposal that we have been rejecting for more than three months”. This is not entirely fair. The government has moved. Piñera is now promising free education to “all those that need assistance”. His definition of who this constitutes, of course, differs from the students, but it is greater than he initially advocated: “Our government, for the first time in history, is undertaking to guarantee grants to all students belonging to the 40% of most vulnerable households in our country, and a system combining grants and loans for the next 20% of households,” Piñera said.
Piñera also appealed to students to rejoin talks. After the breakdown of talks, students promised fresh street protests but the real battleground could now be congress, where the government will seek to push through the education proposals it has made. The students are appealing to congress to throw out anything not agreed beforehand with them. The Concertación’s budget threat, which Piñera branded as “irresponsible”, and its line on tax reform, suggests the students can expect support, at least from the Left of the coalition. Conversely, hard-Right elements of the ruling Coalición por el Cambio are unlikely to agree to anything that smacks of caving in to pressure and an accommodation with the students.
