( Published In Strategy June 6, 2008 )
The union of truckers once again in the story makes tuning the foundations of the palace of La Moneda. The threat of unemployment was running at the palace officials, including the Queen to stop the impending protest action. This is a sign that the famous specific tax on fuel is left very little life and eventually go away. However, whatever the justice of the demands of the truckers, I must ask the effectiveness of this measure to solve the problem of fuel. First, it is important to understand that the price of oil is rising and is not spring from the government of Chile to avoid it. What could be done and not done for the country reduce dependence on petroleum as the main, is a long-term policy that had anticipated. It preferred to leave everything to the market and we know that private investors will only invest in businesses round with short-term gains imminent. The consequences were entirely predictable and are now beginning to spend the account.
The problem is that truck drivers demanding the elimination of the specific tax on fuel. This is favoring the more affluent sectors of the country, and that, having increased energy consumption per person, are especially beneficial owner of the elimination of this tax. It also worsens the problem of air quality by encouraging car use. A more effective mechanism that will ensure a stable price increases medium-term prospective controlled before they could be absorbed, by the population, with reductions in the value added tax that is most damaging to the pocket poorest. If a kilo of bread costs a thousand dollars, in just over two months, a poor family gives the State the 20 pesos it given as bonus compensation for the increases in the cost of living. If we consider a family with an income of 100 pesos a month, of which there are many-who spends all their income on VAT products affected in only one month will give the State what he brings back from time to time as the maximum expression of generosity and social commitment.
If indeed this government had social sensitivity, would fall by as VAT and tax would raise significantly the profits of big business, but that would mean another government and another Chile.
Marcel Claude, an economist.
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