Abstract
This chapter introduces three dimensions of taxation frequently neglected in the analysis of tax systems in Latin America. The relational, historical, and transnational dimensions of taxation presented in this chapter enable us to explore the social, political, and economic embeddedness of taxation. This perspective is of great importance as tax regimes face significant changes caused by a new moment of uncertainty in the region. Decreasing economic growth, high unemployment and inflation, falling global commodity prices, and political and social turmoil call for reforms in taxation and expose the persistent challenges in Latin American tax systems. Even after more than a decade of outstanding economic development, tax systems collect comparatively less revenue, are dependent on volatile tax bases, inefficient, and do not contribute to tackle income inequality. After presenting the relational, historical, and transnational dimensions of taxation and their gains for tax analysis, the contributions of the book are summarized.
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Notes
- 1.
Alliance for Progress was an international economic development program established by US President John F. Kennedy and 22 Latin American countries in the Charter of Punta del Este (Uruguay) in 1961. The objective was to promote political democracy, economic growth, and social justice in Latin America.
- 2.
Data including social security.
- 3.
Such reforms of personal income tax principally aimed to improve collection via different mechanisms: the modification of the tax base (especially to improve taxation of capital income), change in aliquots, and new rules for international taxation. In some cases, dual income taxes were introduced, the minimum taxes modified or introduced, and the fiscalization of big contributors increased (CEPAL, 2015).
- 4.
In this period, the basic receipt to tax reform encompassed (a) the elimination of taxes on trade (import and export), (b) the simplification of the personal income tax (PIT) and an increase in its regressivity commonly justified with an aim to provide incentives for employment and private investment, and (c) a reduction in (high) corporate (income) tax rates based on the argument to prevent capital flight and encourage FDI. With several Latin American countries subject to conditional lending during the 1990s, liberal reforms were frequent in these countries.
- 5.
According to these authors, fiscal policy in the OECD is more effective in reducing inequality as the Gini coefficient falls by 36% after direct taxes and transfers, compared with 6% in Latin American countries (in absolute terms, the Gini coefficient falls 17% in the OECD and only 3 points to the average of 17 Latin American countries). See Hanni et al. (2015, p. 25).
- 6.
Unlike the view which assumes revenue is its only aim.
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Atria, J., Groll, C., Valdés, M.F. (2018). Introduction: Taxation in Times of Uncertainty in Latin America. In: Atria, J., Groll, C., Valdés, M. (eds) Rethinking Taxation in Latin America. Latin American Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-60119-9_1
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