Chile offers Congress tougher mining tax reforms

SANTIAGO, July 7 (Reuters) - Chile's government on Wednesday offered to toughen proposed mining tax reforms, seeking to win congressional approval and avoid a major political defeat for recently installed President Sebastian Pinera.

Pinera is making concessions to center-left lawmakers who earlier rejected his tax proposal in the Senate. The conservative billionaire aims to speed up passage of a far-reaching funding bill to rebuild cities ravaged by a major earthquake in February. [ID:nN16153515]

The government's changes to the bill aim to lift revenue to $1 billion from $600 million by further raising royalties and extending their time-frame, which is likely to fuel concern about mining regulation in the world's top copper producer.

The proposal, which originally represented around 10 percent of the government's $8.4 billion share of post-quake reconstruction, is being debated in a bicameral commission.

The 8.8-magnitude quake and ensuing tsunamis killed more than 500 people and hit key industries like forestry in south-central Chile, but spared the country's mainstay copper industry.

The government's post-quake financing package aims to tap foreign markets by issuing sovereign debt, using money saved from a copper market boom and raising taxes on companies, miners and tobacco. The government does not need congressional approval to issue debt.

Congress has approved all the tax changes proposed in the bill except for the royalty increase, which opposition lawmakers say is insufficient.

The government planned to raise royalties on global miners like BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) and Xstrata (XTA.L: Quote) in exchange for shielding them from further changes to the tax code for several years.

Higher tax collections are expected to keep the peso currency from over-appreciating as billions of dollars are set to flow into the economy for reconstruction.