Fiscal Redistribution and Income Inequality in Latin America

Goñi, Edwin; López, J. Humberto; Servén, Luis

Fiscal Redistribution and Income Inequality in Latin America

Autores

Goñi, Edwin

López, J. Humberto

Servén, Luis

Editor

World Bank, Washington, DC

Descripción

Income inequality in Latin America ranks among the highest in the world. It can be traced back to the unequal distribution of assets (especially land and education) in the region. But the extent to which asset inequality translates into income inequality depends on the redistributive capacity of the state. This paper documents the performance of Latin American fiscal systems from the perspective of income redistribution using newly-available information on the incidence of taxes and transfers across the region. The findings indicate that: (i) the differences in income inequality before taxes and transfers between Latin America and Western Europe are much more modest than those after taxes and transfers; (ii) the key reason is that, in contrast with industrial countries, in most Latin American countries the fiscal system is of little help in reducing income inequality; and (iii) in countries where fiscal redistribution is significant, it is achieved mostly through transfers rather than taxes. These facts stress the need for fiscal reforms across the region to further the goal of social equity. However, different countries need to place different relative emphasis on raising tax collection, restructuring the tax system, and improving the targeting of expenditures.

Palabras clave

ADVERSE EFFECT, AGRICULTURE, AVERAGE INCOME, BENCHMARK, CAPITAL ASSETS, CASH TRANSFER, CASH TRANSFERS, CENTRAL AMERICAN, COL, CONSUMPTION TAXES, CONVENTIONAL INSTRUMENTS, CORPORATE INCOME TAX, CORPORATE TAX, CORPORATE TAX RATE, CORPORATE TAXES, DATA AVAILABILITY, DEDUCTIONS, DEFICITS, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DEVELOPMENT STRATEGY, DISPOSABLE INCOME, DISTRIBUTION OF INCOME, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC LIFE, ECONOMIC PERFORMANCE, ECONOMIC POLICIES, ECONOMIC VOLATILITY, EFFECTIVE TAX RATES, EXPENDITURE, EXPENDITURES, FINANCES, FINANCIAL CRISES, FINANCIAL MARKET, FINANCIAL TRANSACTIONS, FISCAL POLICIES, FISCAL POLICY, GDP, GDP PER CAPITA, GINI COEFFICIENT, GINI INDEX, GLOBAL ECONOMY, GROSS INCOME, HOLDING, HOLDINGS, HOUSEHOLD INCOME, HUMAN CAPITAL, INCENTIVE EFFECTS, INCOME DISTRIBUTION, INCOME GROWTH, INCOME INEQUALITY, INCOME LEVELS, INCOME SHOCKS, INCOME TAX, INCOME TAXES, INCOMES, INDEBTEDNESS, INDIRECT TAXATION, INDUSTRIAL COUNTRIES, INSTITUTIONAL CONSTRAINTS, INSURANCE, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL STANDARDS, INTERVENTIONS, LATIN AMERICAN, LIQUIDITY, MACROECONOMIC STABILITY, MACROECONOMICS, MICRODATA, MIDDLE EAST, MONETARY FUND, NATURAL RESOURCES, NORTH AFRICA, PAYROLL TAXES, PENSION, PENSION SYSTEM, PENSION SYSTEMS, PENSIONS, PER CAPITA INCOME, PERSONAL INCOME, PERSONAL INCOME TAX, POVERTY REDUCTION, PROGRAMS, PROPERTY RIGHTS, PUBLIC FINANCE, PUBLIC GOOD, PUBLIC POLICY, PUBLIC SPENDING, PURCHASING POWER, RATE OF GROWTH, REDISTRIBUTIVE EFFECTS, SIMULATIONS, SOCIAL ASSISTANCE, SOCIAL PROGRAMS, SOCIAL PROTECTION, SOCIAL VALUE, SUB-SAHARAN AFRICA, TARGETING, TAX, TAX ADMINISTRATION, TAX BASES, TAX COLLECTION, TAX COMPLIANCE, TAX CONCESSIONS, TAX EVASION, TAX INCIDENCE, TAX POLICY, TAX RATE, TAX RATES, TAX RECEIPTS, TAX REFORM, TAX REVENUE, TAX REVENUES, TAX STRUCTURE, TAX SYSTEM, TAX SYSTEMS, TAXABLE INCOME, TAXPAYERS, TRANSFER PAYMENTS, TRANSITION ECONOMIES, UNEMPLOYMENT, VALUE ADDED, VALUE ADDED TAXES, VOLATILITY, WEALTH, WESTERN EUROPE