Brief economic analysis on the difficulty of investing and creating wealth in Chile.
Author, Jorge Auristondo Vilches.
NATURE AND FUNCTION OF THE STATE, GOVERNMENT AND DEMOCRACY. WHY DOES IT WORK IN SINGAPORE, THE UNITED STATES OR THE UNITED KINGDOM, BUT NOT IN CHILE?
To be a «developed society» – intellectually and economically speaking – is to have an efficient and effective state and a healthy democracy, administered by bureaucracies that are subject to strict anti-corruption legislation, where there is unity and social cohesion, as in Switzerland (a plesbicitarian democracy) or Singapore and other countries. In «developed societies», tax money is used to finance the government apparatus and social needs such as security, education, health, justice, housing and development. And it is precisely to solve these problems of society that the state and government have been created. A country where the state and the government demand taxation but are not able to solve the social problems for which they were created is a «failed state».
TAXATION IN THE FAILED STATE. HOW THE STATE ROBS US.
But in failed states such as those in Latin America and Africa, where corruption is cultural and a modus vivendis, tax money is wasted on financing and enriching the political oligarchies that control and parasitise the state apparatus.
In this case taxation means theft by the state against citizens and entrepreneurs. You pay and get nothing in return, because nothing works or works half-heartedly. You pay taxes for everything but you get nothing in return, not even public safety.
In our case, taxation is the way the political oligarchy steals from us through the state. Taxation in Switzerland or Singapore is not the same as in Latin America or Africa. In Switzerland and Singapore, taxes go directly to improving the quality of life of citizens. Switzerland prevents pockets of poverty and social inequality by legislating a minimum income of up to €3,901.2 per month, or €46,814 per year.
In Singapore, education is completely free at all levels, and considered among the best in the world. Unlike in Switzerland or Singapore, in Latin America and Africa, taxes only serve as a booty to fatten and enrich the political oligarchies. In Chile, 90% of workers contribute to the state-run FONASA (National Health Fund) for their health insurance, but according to official figures, more than 44,000 contributors die every year for lack of medical care, citizens who contributed for 30 years or more but when they needed care they were denied it, i.e. in Chile it is the state itself that swindles the taxpayers.
HOW THE STATE ROBS US.
In Chile there are neither the political nor the economic conditions to attract investment, while Singapore has a VAT rate of 7%, in Chile it is 20%. Singapore is in 2nd place in the world in business creation, while Chile is in 59th place. In the UK, food does not pay VAT.
Considering the many disadvantages that Singapore has compared to Chile: Singapore (6 million inhabitants), Chile (20 million inhabitants), Chile is one of the richest countries in the world in terms of copper, lithium and natural resources, which Singapore lacks. Undoubtedly, Singapore is a small society that became a world superpower thanks to the honesty and patriotism of the ruling oligarchy that knows how to do a lot with little.
In Chile, every time the investor performs «an economic act», he enters into an endless tax chain where he has to pay dozens of times a tax on the previous tax of that «single economic act»; taxes on taxes before the «productive act» and after it.
HOW MUCH DOES IT COST TO MAKE A SINGLE LOAF OF BREAD IN CHILE? THE TAX ROUTE OF MAKING A LOAF OF BREAD.
You want to make a single loaf of bread in Chile. To do it legally and formally and not clandestinely, you first need to invest the first money in registering with the State and starting your commercial activity at the Servicio de Impuestos Internos (Internal Revenue Service) and then apply for a commercial patent at a municipality. These are the first two important expenses: Initiation of Activities and Commercial Patent. In no case are these costs free or inexpensive, for the start-up of activities and to be able to invoice and/or invoice, it is necessary to buy a digital certificate that costs about 100 dollars and to obtain a patent, sometimes it is necessary to hire an accountant or a tax lawyer to carry out the process, which is quite cumbersome. In contrast to Chile, in the United States or the United Kingdom, registering a company costs 5 dollars or 5 pounds and you can do it in 15 minutes and even on the Internet.
To obtain both the Initiation of Activities and to have the commercial patent, the authority demands a lot of requirements, the first of which is to have the physical address where the business is going to operate, a property with commercial use, so the third and most onerous expense will be to rent or buy a commercial premises where you are going to make your bread.
Now that you have the Business Start-up, the Business Patent and the Business Premises – an overspend without having produced anything yet – you need to buy the inputs to make a single loaf of bread: an oven (gas or electric), flour, water, salt, butter, yeast and the gas or electricity to run the oven and make the bread.
THE GREAT TAX ROBBERY!
But even before you can make a single loaf of bread, you have to pay the state a whole lot of money, plus 20% VAT for every single raw material we need!
In Chile the value added tax – IVA – is 20%, in other countries it is 0%, up to 50% or more.
Before you can make a single loaf of bread, the State has already made a millionaire out of you by charging you 20% VAT on the oven, + 20% on the flour (in Chile flour pays an extraordinary tax of 35%), + 20% on the water, + 20% on the salt, + 20% on the butter and another 20% on the gas or electricity, without taking into account the other 20% spent on transport to get the raw materials alone.
Do you get it, you? Before you make a single loaf of bread and earn only 2 cents on the dollar at which you can sell a single loaf of bread, the government has already become rich at your expense and you are still poor, because you have earned only 2 cents on the dollar by selling a loaf of bread. And, oh surprise! The nightmare continues when you find out that the State will also be charging you 20% VAT when you sell your bread.
Psicoanálisis de Geopolítica. Economía, Religión y Hechos Mundiales. 