Policy Brief

More than Revenue: Main Challenges for Taxation in Latin America and the Caribbean

AUTHOR(s): Ter-Minassian, Teresa
PUBLISHED: September 2012
RELATED TOPICS: Macroeconomics


This paper aims to provide an overview of the current state of taxation in the Latin America and Caribbean (LAC) region, and its main reform needs and options. It previews the findings of recent studies prepared or commissioned by the Inter-American Development Bank (IDB) for its forthcoming flagship publication More than Revenue: Taxation as a Development Tool in the -Development in the Americas- series. Reflecting fiscal consolidation imperatives, the main objective of fiscal policies in the region in recent decades has been revenue mobilization, often at the expense of efficiency and equity objectives. This paper analyzes the region’s taxation in regard to revenue adequacy, efficiency, vertical and horizontal equity, ease of administration and compliance, and degree of fiscal decentralization, concluding that there is significant scope for reforms that would result in simultaneous improvement on several of these fronts. Although the paper does not provide a specific blueprint for reforms, which would need to be designed on a country-by-country basis, it identifies directions for reform that are relevant for most of the region.

Related Research by JEL Codes:
(or click here to find research by JEL Codes)
  • Reducing Reliance on Natural Resource Revenue and Increasing Subnational Tax Autonomy in Bolivia
    Working Papers
    IDB-WP-298 - April 2012

    This paper address options for restructuring the revenue system of Bolivia’s subnational governments, particularly prefectures, emphasizing reduction of dependence on natural resources and strengthening of subnational tax autonomy. The paper additionally identifies tax instruments or tax bases that could be assigned exclusively to regional governments or shared with the central government, assessi ... (View publication)

  • Is there an anti-labor bias in Latin American tax policies?
    Policy Brief
    IDB-PB-177 - October 2012

    Payroll taxes along with minimum wages have derived in a remarkable increase in labor costs in Latin America since the nineties. Given that, simultaneously, corporate taxation rates have dropped, this study analyzes the probability of a resulting anti-labor taxing bias in Latin American countries. An accounting approach is used which allows calculating the effective rates of taxation for both work ... (View publication)

  • Reform Priorities for Sub-national Revenues in Brazil
    Policy Brief
    IDB-PB-157 - May 2012

    This paper surveys the system of sub-national own revenues and the inter- governmental transfer system (including the sharing of oil revenues) in Brazil, highlighting their critical flaws. The latter include heavy reliance on a mixed- origin/destination-based value-added tax and many sub-national governments’ inadequate exploitation of the tax bases assigned to them. The paper then discusses refor ... (View publication)

Hello, Welcome to the IDB!

Please join our mailing list by simply entering your email below.