Chile is “changing” its fuel tax regime, with the goal of eliminating costs to the state that added up to $2.34 billion between 2000 and 2009, according to the finance ministry. To put that into plain English (or Spanish, as the case may be), they are going to raise fuel prices and reduce the state subsidy. (It would be deceptive to say they are making drivers pay for the full costs of their fuel, as they still don’t pay for the incredibly high cost of lousy air in Santiago. But I digress…)
A few little points:
-Hooray for consistency in free-market rhetoric. Fuel subsidies are one of those places where right-wing talkers usually fall silent. Given the painfully high cost of being poor in Chile, it’s nice to see a measure that will disproportionately tax the rich.
-It will be interesting to see if there’s any effect on the government’s popularity. I doubt it. Personally, reading the press release, and the even more complicated PDF presentation I have no way of knowing who will pay more, or when, or how much.
-I can think of a few bigger energy consumers that might benefit from a fuel price stabilization fund that boosts fuel prices when they are low and cuts them when high.