Chile: Technical Assistance Report-Tax Revenue Projections

[This report is only available in Spanish] Accuracy in fiscal revenue projections is a fundamental pillar of the budgetary process in Chile. In contexts without economic shocks, the differences between tax revenue estimates and actual collections were minimal. However, the pandemic and numerous temporary tax policy measures introduced significant uncertainty that has complicated tax revenue projections. To address this challenge, it is crucial to identify the sources of the gaps in tax revenue projections and communicate them transparently. This Technical Assistance Report, which focused on enhancing the accuracy of tax revenue projections, made some key recommendations. They include: 1) Using proxy variables that most more accurately reflect the tax bases that are estimated; 2) Critically and prudently assessing and revisiting the impact of discretionary changes, both in tax policy and administration; and 3) Strengthening the institutional framework and transparency of the tax revenue projection process, by promoting clear and consistent methodologies that also ensure continuity and regular updates.