SANTIAGO, Chile (AP) — Chile’s Congress on Tuesday approved nearly all of the remaining changes to a sweeping tax and economic overhaul package promoted by President José Antonio Kast, delivering a legislative victory to the conservative leader and his efforts to stimulate growth in one of Latin America's wealthiest nations.

Tuesday’s vote comes as Kast, who took office just over three months ago, struggles to jolt a sluggish economy. The economy shrank 0.5% in the first quarter of 2026 after several months of weak growth. Unemployment rose to 9.4% in the March-May period, its highest level since June 2021.

The legislation aims to revive Chile’s private sector, drive job creation and eliminate the fiscal deficit. It will gradually slash the corporate tax rate for large companies from 27% to 23%, exempt newly built homes from the country’s value-added tax, limit which new universities can join Chile’s free tuition program and allow private companies to seek compensation when environmental disputes delay investment projects.

Last week the Senate approved the bill, but it modified certain articles, sending it back to the lower house for a final vote. On Tuesday, lawmakers approved every change except one dealing with how municipalities will be compensated for tax breaks. To become law, the bill awaits a resolution on that final, minor sticking point.

Kast welcomed the vote on his government's signature economic project.

“I hope all political sectors will work together so the remaining issue can be resolved quickly," he said, speaking to reporters in the northern city of Copiapó, where he was overseeing the government response to severe storms.

Kast, 60, took office in March promising to crack down on crime and illegal immigration while reducing public spending and boosting private sector revenues. His election marked Chile’s sharpest shift to the right since the end of the 1973-1990 military dictatorship, and he has pledged a return to the market-oriented economic policies associated with that era.

“The president’s efforts have essentially been focused on deepening and returning to the orthodox neoliberal model of the late 1970s and early 1980s,” said political analyst Gilberto Aranda. “What existed before was neoliberalism tempered by subsidies and other measures."

Finance Minister Jorge Quiroz said the reform would give investors greater certainty, reduce bureaucratic hurdles for investment projects and make the Chilean tax system more competitive.

“We are enormously satisfied,” Quiroz said after the vote.

Opposition lawmakers have criticized the legislation for favoring Chile's big corporations and wealthiest citizens and vowed to challenge it in the Constitutional Court.

“It has become clear that all of José Antonio Kast’s talk about security, jobs and immigration was simply a Trojan horse to advance the project he truly cares about: cutting taxes for the richest Chileans,” said Constanza Martínez, president of the left-wing Broad Front coalition.

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