The aim of this paper is to analyze the efficiency of the Chilean tax system. For analytical purposes we distinguish between the tax structure and the performance of the tax administration. The tax structure is relatively efficient. Consumption taxes account for more than 58% of the aggregate tax collection, while income taxes represent about 25% of the total tax revenue. The corporate income tax and the personal income tax are integrated. A flat 11 % import tariff, along with a zero VAT rate for exports, results in a low anti-export bias. The tax administration cost per peso collected is low compared to other countries. Between 1980 and 1991 the administrative cost per peso collected fell by one half. In addition, the Internal Revenue Service has enacted a number of measures which reduce the taxpayers' compliance costs. The VAT evasion amounts to about a third of the potential net revenue. This figure is comparatively low for developing countries.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
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