View
53
Download
0
Category
Tags:
Preview:
DESCRIPTION
The elusive relationship between taxes and equity in Latin America. Juan Pablo Jiménez Economi c Commission for Latin America and the Caribbean The political economy of tax reform in Latin America Wilson Center. Latin American Program December 11, 2012 Washington DC. Index. - PowerPoint PPT Presentation
Citation preview
Juan Pablo JiménezEconomic Commission for Latin America and the
Caribbean
The political economy of tax reform in Latin America
Wilson Center. Latin American Program
December 11, 2012Washington DC
The elusive relationship between taxes and equity in
Latin America
IndexI. Motivation of the presentation
II. Characteristics of inequality in Latin America
III. The role of fiscal policy in the income distribution
IV. Potentialities and limitations of taxation as an instrument for reducing inequality
V. Conclusions and challenges
MotivationsI. Although inequality in Latin America has decreased in
recent times….
II. High inequality in distribution with a high concentration of income in the top decile
III. There is a consensus about what fiscal policy (by the expenditure side) can do to promote more equal societies…
IV. However, there remains a better understanding about what is the role of tax policy in reducing inequality
V. And better understanding of the political economy of necessary tax reform
Latin America is the most unequal region in the world …but within the region, the differences are remarkable
Gini Index in LA. Last data available
Source: CEPAL for LA and the Caribbean and World Bank, World Development Indicators for the rest
From 1990 to 2011 income inequality has been reduced in many countries…However, dividing in two periods, both trends were completely different
Latin America (18 countries): GINI Index, 1990, 2002 and 2011
Source: ECLAC
Characteristics of inequality in LA
High inequality in the distribution with a high concentration of income in the richest decile
Significant differences within the country jurisdictions (geographical inequality)
Large size of the informal economy
The ratio between the highest and lowest deciles and quintiles are higher than in any other region
LATIN AMERICA (18 COUNTRIES):INCOME DISTRIBUTION BY DECILE(Percentages and number of times)
Source: ECLAC
The redistributive capacity of fiscal policy is lower than in developed countries
LATIN AMERICA AND EU COUNTRIES: DISTRIBUTIVE IMPACT OF FISCAL POLICY (Gini Index)
Source: Goñi, E., J.H. López and L. Servén (2011), "Fiscal redistribution and income inequality in Latin America", The World Bank.
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Argentina Brazil Chile Colombia Mexico Peru Latin America average
EU average
Gini before transfers and taxes Gini after transfers and before taxesGini after transfers and direct taxes Gini after transfers and direct and indirect taxes
The role of Fiscal Policy in the income distribution
Through public expenditure, mainly social public expenditure Level and composition
Through its financing: tax policy Level and structure
Debate between spending and revenue and their redistributional impact: while in the short term, government spending is a more
powerful instrument than the tax system; in the long run a progressive system of income taxation can
contribute significantly to reduce inequality.
The tax level has increased in almost every country. But the region is not homogeneous… differences between countries are enormous
LATIN AMERICA: TAX BURDEN (INCLUDING SOCIAL SECURITY CONTRIBUTIONS)(Percentage of GDP)
Source: ECLACNote: Central Government, except General Government for Argentina, Bolivia, Brazil, Chile, Costa Rica, and Mexico
0 5 10 15 20 25 30 35
GuatemalaMéxico
Paraguay
VenezuelaRep. Dominicana
ColombiaEl Salvador
Honduras
PerúPanamá
Ecuador
ChileBolivia
Costa RicaNicaragua
UruguayArgentina
Brasil
2008-2011 1990-1992
GRUPO 1
GRUPO 3
GRUPO 2
GRUPO 1
GRUPO 3
GRUPO 2
Porcentaje del PIB
The higher tax burden is partially explained by the fiscal reforms implemented since the early nineties
TAX REFORM IN LATIN AMERICA: 1990-2004
Source: Focanti, Hallerberg y Scartascini (2012)
Two waves of reforms with different objectives and different results Tax reforms in the
1980s Tax reforms in the 2000s
Objectives Economic efficiency Horizontal equity Increase tax revenues
Redistribution of income?
Mechanisms Expanding the tax base Rationalization of tax structure Simplification of tax administration.
Simplifying taxes Reforms in the income tax
Outcome Reduced revenues from international trade, social security and personal income tax. Significant increase in the consumption tax
Increased income and capital revenue Reduced rates on excise taxes, goods and services and on international trade Increased revenue from the exploitation of natural resources
Distributive impact
Shifting the tax burden to the middle class, increasing inequality,
Reducing inequality
Why tax policy has had so little influence on income distribution? Low and volatile tax burden
Tax burden is low when compared with relative development and other regions
Fiscal revenues depend on highly volatile non-tax revenues, especially in countries that depend on NNRR
Tax revenues are three times more volatile than in developed countries
Unbalanced structure Biased towards indirect taxes Income taxes increased, however there is a gap in the personal income
tax when compared with other regions The Income Tax is mainly based on corporations and PIT on wage-
related rents And there is high vertical asymmetry and insignificant
property taxes Narrow tax base Narrow tax base
High informality and high evasion rates restrict even more the narrow tax bases
And the widespread use of tax expenditures generates a significant revenue loss
Simplified regime
The IT has a “ progressive design” but a low impact on income distribution
DISTRIBUTIVE IMPACT OF INCOME TAX IN la
Source: Barreix, A., Bès, M. y Roca, J. (2009); Barreix, A., Roca, J. y Villela, L. (2006); Gómez Sabaini, J.C.; Harriague, M. y Rossignolo, D. (2011); Rezende, F. y Afonso, J. (2010); Roca, J. (2010); y Jorrat, M. (2010).
Colombia 2004 0.5370 0.8940 0.3570 0.4590 0.0780 0% 99% 497.0Rep.Dominicana 2004 0.5106 0.9057 0.3951 0.4759 0.0347 0% 97% -Chile 2006 0.5791 0.9677 0.3886 0.5584 0.0207 0% 99% -Uruguay 2006 0.4995 0.8630 0.3635 0.4875 0.0120 0% 92% 230.3Argentina 2006 0.4839 0.9375 0.4536 0.4738 0.0101 0% 98% -El Salvador 2006 0.5034 0.8281 0.3247 0.4947 0.0087 1% 90% 90.0Costa Rica 2004 0.5770 0.9098 0.3328 0.5692 0.0078 0% 96% 874.6Brasil 2003 0.6180 0.9243 0.3063 0.6119 0.0061 1% 94% 156.7Nicaragua 2001 0.5963 0.9441 0.3478 0.5905 0.0058 0% 94% -Panamá 2003 0.6364 0.8803 0.2439 0.6312 0.0052 2% 96% 54.0Honduras 2005 0.5697 0.9000 0.3303 0.5647 0.0050 0% 95% -Ecuador 2004 0.4080 0.8310 0.4230 0.4040 0.0040 0% 93% 311.0Venezuela 2004 0.4230 0.8400 0.4170 0.4210 0.0020 0% 100% -Guatemala 2000 0.5957 0.9115 0.3158 0.5946 0.0011 2% 93% 48.8Perú 2004 0.5350 0.5820 0.0470 0.5344 0.0007 10% 64% 6.7
Gini post impuestos
Reynolds Smolensky
PaísINDICES
Año Gini pre impuestos
Cuasi Gini impuestos
Kakwani 40% inferior
20% superior
20% sup. / 40% inf.
Quién paga el impuesto
The minimum and the maximum tax rates apply differently than in other regions
TAXABLE INCOME (as a percentage of per capita GDP) AND STATURORY TAXES (in percentages) THE PERSONAL INCOME TAX IN LATIN AMERICA AND OTHER REGIONS – YEAR 2009
Source: Gómez-Sabaíni, Jiménez and Rossignolo (2011)
Minimum Maximum PIT (minimum) PIT (maximum)
CIT
Latin America (18) 1.52 10.27 10.60 27.10 26.80
Caribbean (17) 1.47 5.99 17.50 32.10 31.10
Eas t As ia and Pa cifi c (32) 1.19 15.65 9.00 29.00 24.00
Centra l Europe a nd Centra l As ia (31) 1.08 2.16 13.30 19.40 15.80
Middle Eas t and North Africa (21) 1.21 8.60 10.40 26.00 24.90
South As ia (8) 3.22 34.17 8.60 25.70 30.40
Sub-saharan Africa (47) 2.55 19.11 10.10 35.20 30.30
Western Europe (20) 0.35 3.97 16.70 39.90 26.10
Uni ted States and Canada (2) 0.20 5.42 12.50 32.00 26.50
PIT Taxable Income (a) Shares (in percentages)
Regions
And tax evasion also decreased the narrow tax base and is higher in IT than in the VAT
ESTIMATED TAX GAP IN THE VAT AND IT
Source: Gómez-Sabaíni and Jiménez (2011)
.
.
Total Individuals CompaniesArgentina 21.2% 2006 49.7% -- -- 2005
Bol ivia 29.0% 2004 -- -- -- --
Chi le 11.0% 2005 47.4% 46.0% 48.4% 2003
Costa Rica 28.7% 2002 -- -- -- --
Colombia 23.5% 2006 -- -- -- --
Ecuador 21.2% 2001 63.8% 58.1% 65.3% 2005
El Sa lvador 27.8% 2006 45.3% 36.3% 51.0% 2005
Guatemala 37.5% 2006 63.7% 69.9% 62.8% 2006
Mexico 20.0% 2006 41.6% 38.0% 46.2% 2004
Nicaragua 38.1% 2006 -- -- -- --
Panamá 33.8% 2006 -- -- -- --
Peru 37.7% 48.5% 32.6% 51.3% 2006
Dominican Rep. 31.2% 2006 -- -- -- --
Uruguay 26.3% 2006 -- -- -- --
VAT INCOME TAX
Estimated tax gap rate Year
Estimated tax gap rateYear
Tax expenditures are higher in PIT than in any other type of tax
TAX EXPENDITURES IN LATIN AMERICAN COUNTRIES - Year 2007(in percentage of GDP)
Source: Gómez-Sabaíni, Jiménez and Rossignolo (2011)
TAX ARGENTINA BRAZIL CHILE COLOMBIA ECUADOR GUATEMALA MEXICO PERU
VAT 1.14 0.36 0.76 1.92 3.40 1.96 2.15 1.44
INCOME TAX 0.51 1.11 4.21 1.60 1.20 5.28 3.02 0.29
PERSONAL INCOME TAX - 0.66 3.31 0.24 0.80 4.35 1.56 0.19
COMPANIES INCOME TAX - 0.45 0.90 1.36 0.40 0.93 1.45 0.10
SOCIAL SECURITY 0.25 0.74 - - - - - -
SELECTIVE TAXES 0.13 0.00 - - - - - -
INTERNATIONAL TRADE TAXES 0.16 0.08 - - - 0.20 - -
OTHER TAXES 0.02 0.00 - - - 0.46 0.76 0.32
TOTAL (% OF GDP) 2.21 2.29 4.97 3.52 4.60 7.91 5.92 2.05
TOTAL (% OF TOTAL TAXES) 8.90 9.10 24.60 22.00 35.30 63.50 50.70 11.90
PIT/TOTAL TAXES TAX EXPENDITURE RATIO - 66.60 6.80 17.40 55.00 26.40 9.30
Conclusions and challenges Fiscal policy through the expenditure side had
an impact in decreasing inequality. Tax policy has a role to play But tax structure and the characteristics of
inequality in the region makes it difficult The big gap is in the personal income tax Tax reforms have to be addressed towards
increasing progressivity in order to reduce inequality: tax bases should increase and there is space to increase tax rates
Conclusions and challenges There is a virtuous circle that should be strengthened:
tax base expansion and formalization of taxpayers helps reduce tax evasion and promotes voluntary compliance enhance horizontal and vertical equity between taxpayers strengthen state legitimacy which finally will increase public confidence in public institutions.
Working in this direction would address two of the key challenges in the region:
rebuild the "fiscal space" address the multiple dimensions of inequality in the
region.
Juanpablo.jimenez@cepal.orgEconomic Commission for Latin America and the
Caribbean
The political economy of tax reform in Latin America
Wilson Center. Latin American Program
December 11, 2012Washington DC
Thank you very much!
Breve descripción del período 2003-2011
Reducción de la desigualdad
Causas de la reducción
Características de la desigualdad en AL
Elevada desigualdad en la distribución del ingreso con fuerte concentración en el decil más rico,
Significativa importancia de la economía informal
23Fuente: Gomez Sabainii (2012() en base a Schneider, F. (2012); “The Shadow Economy and Work in the Shadow: What Do We (Not) Know?”, Institute for the Study of Labour (IZA).
Tamaño de la economía informal - Promedio 1999-2007 (promedio ponderado por PIB 2005)
La economía informal es muy alta en AL
13,4
17,1
25,127,3
34,736,4
37,6
36.000
9.488
1.2793.870
8.544 7.610
1.2540,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
Alto IngresoOECD
Mundo SudesteAsiático
MedioOriente yÁfrica del
Norte
AméricaLatina yCaribe
Europa yAsia Central
África sub-Sahariana
Tam
año
de la
eco
nom
ía in
form
al (e
n %
del
PIB
ofic
ial)
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
PIB per cápita 2010 (en dólares PPP - B
anco Mundial)
Los ingresos tributarios son bajos cuando se los compara con otras regiones
COMPARACIÓN DE LA CARGA TRIBUTARIA INTERNACIONAL(En porcentaje del PIB)
Fuente: CEPAL, OECD y FMI
OCDE (30) UE (15) Estados Unidos
Asia en de-sarrollo (10)
África Sub-sahariana (9)
América Latina (19)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
14.7 16.1 14.9
3.36.8 5.4
11.011.7
4.6
9.1
16.0
9.6
9.011.2
6.5
0.1
1.7
3.3
34.8
39.2
26.1
12.6
24.5
18.4
Carga tributaria directa Carga tributaria indirecta Seguridad social
En %
del
PIB
Y en promedio son tres veces más volátiles que en los países desarrollados
AMÉRICA LATINA Y PAÍSES DESARROLLADOS: VOLATILIDAD DE LOS INGRESOS TRIBUTARIOS (SIN SEGURIDAD SOCIAL)
(Desviación estándar)
Fuente: Jiménez y Kacef (2010)
Ven
ezue
la
Ecu
ador
Cos
ta R
ica
Per
ú
Bol
ivia
Arg
entin
a
Pan
amá
Rep
. Dom
i...
Par
agua
y
El S
alva
dor
Gua
tem
ala
Uru
guay
Nic
arag
ua
Chi
le
Hon
dura
s
Méx
ico
Bra
sil
Col
ombi
a
Gre
cia
Isla
ndia
Por
tuga
l
Finl
andi
a
Japó
n
Sue
cia
Esp
aña
Est
ados
Un.
..
Nor
uega
Paí
ses
Baj
os
Italia
Aus
tralia
Rei
no U
nido
s
Din
amar
ca
Aus
tria
Fran
cia
Bél
gica
0.0
5.0
10.0
15.0
20.0
25.0
12.3
4.5
América Latina Países desarrollados
La estructura tributaria se ha sesgado altamente hacia los impuestos sobre el consumo
AMÉRICA LATINA y OCDE: EVOLUCIÓN DE LA ESTRUCTURA TRIBUTARIA PROMEDIO, 1990-2009(En porcentaje del total recaudado)
Fuente: CEPAL
El IR ha crecido en forma significativa…Pero este crecimiento se basa en el crecimiento de los IR sobre sociedades
AMÉRICA LATINA: IMPUESTO A LA RENTA DE INDIVIDUOS Y EMPRESAS, 1998-2011(En porcentajes de PIB)
Source: ECLAC
0.7 0.7 0.8 0.8 0.7 0.6 0.6 0.6 0.6 0.8 0.9 0.9 0.9 1.0
2.0 2.0 2.1 1.9 1.8 1.8 2.1 2.4 2.62.8 2.8 2.8 2.5
2.6
0.8 0.9 0.9 1.0 1.0 1.01.0
1.11.4
1.4 1.4 1.21.3
1.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Individuos Sociedades No clasificables
Recommended