Chile mulls raising mining royalty after quake

SANTIAGO, March 19 (Reuters) - Chile is studying whether to ask miners to pay more taxes voluntarily as the world's top copper producer seeks funds to rebuild areas ravaged by a massive earthquake, the author of the proposal said on Friday.

The 8.8-magnitude quake on Feb. 27 killed hundreds, flattening villages and mangling infrastructure that the government says totaled around $30 billion in losses.

President Sebastian Pinera, a center-right businessman who was sworn in last week amid strong aftershocks, has vowed to raise funds to pay for the reconstruction of the quake-hit regions in south-central Chile.

Paul Fontaine, an economist who worked in Pinera's presidential campaign, said the government asked him for a bill that raises the mining royalty to 8 percent from the current 5 percent.

He said the proposal would ask companies to voluntarily pay the high royalty in order to avoid the risk of even higher taxes from a future government or from Congress .

"It is much more reasonable to have a three percentage point increase than to risk a hike of 10 or more in the future. This will give companies a legal guarantee that would be good for long-term investment," Fontaine told Reuters.

Local media on Friday quoted Mining Minister Laurence Golborne, who until recently said a royalty hike was not part of the government's plan, as saying the administration was mulling changes to the tax scheme.

"Obviously the government will respect the current legal framework under any circumstance," Golborne was quoted as saying by Santiago-based El Mercurio.

The proposed royalty increase would add an additional $500 million a year in tax revenues to the state, Fontaine said, adding that more companies would be taxed under the voluntary scheme.

Some politicians from the opposition center-left coalition have said companies should be charged more taxes as copper prices hover above $3 a pound. (Reporting by Alonso Soto; Editing by Marguerita Choy)