SANTIAGO, Nov 13 (Reuters) - Chilean presidential favorite Michelle Bachelet plans to spend $15 billion on ambitious reforms seeking to redress steep income inequality in the Andean country.
Center-left Bachelet, who governed as Chile's first female president from 2006 to 2010, is poised to stroll to victory in Sunday's general election or a potential December run-off.
Her stance has moved somewhat to the left since the end of her presidency, a shift that has coincided with massive protests for free and improved education that have swept Latin America's economic star in the past two years.
Bachelet's comeback bid has hinged on hiking corporate taxes to fund an education overhaul.
She is also planning a blitz of social measures that could profoundly shake up traditionally conservative Chile, including legalizing abortion in select cases and perhaps gay marriage. Many of her policies also seek to undo the legacy of the 1973-1990 dictatorship of Augusto Pinochet.
But Bachelet will have to wrestle with a notoriously tricky Congress and slowing economic growth as she seeks to transform her plans into reality.
The right's candidate, Evelyn Matthei, who is trailing a distant second in polls, argues that tampering with Chile's economic model, widely seen as a Latin American success story, could cost it dearly.
Here are the main policy proposals from the two front-runners:
BACHELET (NUEVA MAYORIA):
ECONOMIC POLICIES
- Gradually raise corporate taxes to 25 percent from their current 20 percent. Along with other tax changes, the increased take would be equivalent to 3 percent of gross domestic product (about $8.5 billion at current levels).
- Get rid of the FUT (Fondo de Utilidades Tributables), a mechanism companies can use to gain tax exemptions on part of their profits.
- Reduce the maximum individual tax rate from 40 percent to 35 percent over the course of four years.
- Reduce the effective fiscal deficit from roughly 1 percent of GDP currently to zero by 2018.
- Seek a competitive exchange rate to boost exports.
- Increase financial oversight, reinforce norms against collusion, and advance towards incorporating Basel III capital rules agreed globally to make banks safer after the 2007-09 credit crisis.
SOCIAL AND GOVERNMENT POLICIES
- Reform Chile's largely privatized education system, which critics charge unfairly favors the wealthy. The reforms will include working towards free higher education, ending state subsistence of for-profit schools, and opening more nurseries and pre-schools. Education reform will require a permanent reallocation of 1.5 percent to 2 percent of GDP.
- Legalize abortion in cases of rape or risks to the mother or child's health. Chile is one of only a few countries in the world where abortion is currently completely banned.
- Create a state-run pension fund as an alternative to private funds.
- Spend $4 billion on new hospitals, build more health centers, employ more doctors and subsidize the cost of some medicines.
- Draft a new constitution to replace the one implemented under Pinochet in 1980.
- Reform the electoral system which generally guarantees the two biggest parties dominate Congress, with neither having a large majority, while independents are under-represented.
- Decentralize power by allowing governors to be elected by local communities rather than be selected by the national government.
- Have an "open debate" on gay marriage to create a bill which would be sent to Congress.
MINING AND ENERGY POLICIES
- Bachelet has emphasized that Chile must "recover" its competitive edge in mining, chiefly by taming high power prices and improving the concessions system to encourage exploration, but she hasn't provided much detail.
- The policies that will seek to balance out Chile's rising energy needs with environmental concerns will be set out within the first 100 days.
- Bolster the state's role in regulating the energy sector and strengthen environmental institutions.
- Boost use of Liquefied Natural Gas. Promote a coordinated system of purchases of "attractive" LNG volumes to find best-priced LNG cargos.
- Bachelet's policy program as it stands makes no mention of any plan to change mining royalties.
- Continue to capitalize state-run miner Codelco.
- Bachelet has not expressed her views on several unpopular resources projects, though she has indicated that a plan to build a 2,750-megawatt HidroAysen hydropower project could be scrapped unless plans are amended.
- Encourage gas exploration by state-owned oil company ENAP.
MATTHEI (ALIANZA):
- Continue with the largely business-friendly policies of current conservative President Sebastian Pinera.
- Fund spending from economic growth rather than tax changes, spending about $17 billion over four years.
- Boost the minimum wage with state contributions and build 100 health centers.
- Increase the number of police, giving them greater powers to search people and property, and automatically lock up criminals if they reoffend.
- Pay bonuses to high performing teachers and invest in infrastructure in 1,000 high priority schools.
- Favors approval of HidroAysen. (Compiled by Santiago bureau; Editing by Paul Simao)
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