The third concept, social assistance, is composed of unconditional and conditional cash transfers, noncontributory pensions, and near-cash transfers. Cash transfers include the cash benefits from Chile’s flagship program ( _Chile Solidario/Ingreso Ético Familiar_ ), the family allowances scheme of the subsystem for comprehensive early childhood protection ( _Chile Crece Contigo_ ), non-contributory pensions ( _Pensiones Solidarias_ ), and other allowances and special scholarships.<sup>8</sup> Near-cash transfers include complementary support for food and school texts, clothes and supplies.<sup>9</sup> An additional concept of public spending that is taken into account, but not as part of social spending, is that of subsidies, particularly for water, public transportation and gas in the Magallanes region, which account for 0.49 percent of the GDP. The water subsidy is targeted to low-income families who face difficulties to pay for running water services; that for public transportation is a generalized subsidy, benefiting all the user population; and that for gas is applied to all families living in the aforementioned region of the country.

Regarding Chile’s income structure, in 2013 total government revenues represented 21 percent of the GDP, of which tax revenues accounted for about 80 percent (or 16.7 percent of the country’s GDP) with a relatively higher dependence on indirect taxes on sales of goods and services (9.8 percent), than on direct taxes on income (6.6 percent)<sup>10</sup> (Table 2). For direct taxes, the incidence analysis considers only those on personal income: i) Second Category Tax (SCT), which is a monthly tax levied on income derived from dependent employment, such as salaries, contributory pensions and other remuneration; and ii) Complementary Global Tax (CGT), which is levied on annual total income obtained by an individual and any SCT paid or First Category Tax (FCT)<sup>11</sup> related to dividends received is creditable against it. The rates for both SCT and CGT range from 0 to 40 percent.

For indirect taxes, the analysis includes: i) the value added tax (VAT), which is levied at a rate of 19% on sales of goods and services; ii) special taxes on non-alcoholic and alcoholic beverages, which are charged in addition to the VAT and on the same tax base as that for VAT with varying rates depending on the alcohol content; iii) excise taxes levied on tobacco, which are charged on the value of the sale to the final consumer with varying rates depending on the product —i.e., cigars, processed tobacco,

> 8 The following allowances of the flagship cash transfers program —related to social protection, child health, school attendance, school achievement, and female work— are considered in the analysis: _Bono de protección social y egreso_ , _Bono base familiar_ , _Bono por control del niño sano_ , _Bono por asistencia escolar_ , _Bono por logro escolar_ , and _Bono al trabajo de la mujer_ . In the case of _Chile Crece Contigo_ , the following child, maternity, disability, and mental disability allowances are included: _Subsidio familiar al menor o recién nacido_ , _Subsidio de asistencia maternal_ , _Subsidio familiar a la madre_ , _Subsidio familiar por invalidez_ , and _Subsidio discapacidad mental_ . Cash transfers for old-age and disabled population ( _Pensiones Solidarias_ ) include: _Pensión Basica Solidaria de Vejez e Invalidez_ , _Aporte Previsional Solidario de Vejez e Invalidez_ , and _Pensiones de Leyes Especiales de Reparación_ . Other benefits in cash include: _Bono bodas de oro_ , _Bono de invierno_ , _Bono marzo_ , _Asignación Familiar_ , _Subsidio empleo joven_ , _Aporte estatal Fondo de Censatía Solidario_ , _Descuento Cotizaciones de Salud_ , _Beca Indígena_ , _Beca Retención Escolar_ , and _Beca Presidente de la República_ .

> 9 The near-cash transfers included in the analysis are: Progama Nacional de Alimentación Complementaria, Progama Nacional de Alimentación Complementaria para el Adulto Mayor, Programa de Alimentación Escolar, Yo elijo mi PC, and Útiles Escolares.

> 10 Chile’s tax burden of 16.7 percent of GDP, as reported by administrative data, does not necessarily coincide with the figures published by multilateral organizations due to differences in concepts and definitions. Using revenue statistics of the OECD (2016b), the tax burden in Chile in 2013 is placed close to the Latin American average, but well below (by about 12 percentage points) the tax burden of Argentina, Brazil and the OECD average.

> 11 The FCT is levied on income from capital and from enterprises that undertake commercial, industrial, and other activities. The FCT paid by an enterprise can be used as a credit against the CGT to which its owners, shareholders, partners or managers are liable when they receive dividends.

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