A New Fiscal Pact, Tax Policy Changes and Income Inequality
AbstractThe paper analyses the changes in tax policy, tax/GDP ratios, tax incidence and income inequality which have taken place in Latin America during the last decade against the background of the changes observed in these variables during the liberal years of the 1980s and 1990s. The paper argues that the recent tax policy changes and a favourable external environment led to an increase of about three points in the regional tax/GDP ratio, that such increase in taxation took place in a slightly or substantially more progressive way than in the past, that the Gini coefficient of the distribution of household income improved on average by 0.4-0.8 points, and that, as a result, redistribution via taxation improved (especially in the Southern Cone) in relation to the 1990s thanks to greater reliance on direct taxes and a reduction in excises. However, in the mid-late 2000s taxation remains unequalizing in about a third of the countries of the region, especially in Central America. The paper concludes by offering recommendations on how the new fiscal pact evolving in the region can be strengthened to improve the redistributive effect of taxation in the years ahead.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Economics with number wp2012_03.rdf.
Length: 46 pages
Date of creation: 2012
Date of revision:
tax policy; tax incidence; income inequality; redistribution; fiscal exchange; Latin America;
Other versions of this item:
- Cornia, Giovanni Andrea & Martorano, Bruno, 2011. "A New Fiscal Pact, Tax Policy Changes and Income Inequality," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-02-27 (Accounting & Auditing)
- NEP-ALL-2012-02-27 (All new papers)
- NEP-PBE-2012-02-27 (Public Economics)
- NEP-PUB-2012-02-27 (Public Finance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aghion, Philippe & Caroli, Eve & Garcia-Penalosa, Cecilia, 1999.
"Inequality and economic growth: the perspective of the new growth theories,"
CEPREMAP Working Papers (Couverture Orange)
- Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
- Garcia-Penalosa, Cecilia & Aghion, Philippe & Caroli, Eve, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Economics Papers from University Paris Dauphine 123456789/10091, Paris Dauphine University.
- Aghion, Philippe & Caroli, Eve & GarcÃa-PeÃ±alosa, Cecilia, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Scholarly Articles 12502063, Harvard University Department of Economics.
- Bernardi, Luigi & Barreix, Alberto & Marenzi, Anna & Profeta, Paola, 2007. "Tax systems and tax reforms in Latin America: country studies," MPRA Paper 5223, University Library of Munich, Germany.
- Nora Lustig & Carola Pessino & George Gray Molina & Wilson Jimenez & Veronica Paz & Ernesto Yanez & Claudiney Pereira & Sean Higgins & John Scott & Miguel Jaramillo, 2011.
"Fiscal Policy and Income Redistribution in Latin America: Challenging the Conventional Wisdom,"
1124, Tulane University, Department of Economics.
- Nora Lustig, 2011. "Fiscal policy and income redistribution in Latin America: Challenging the conventional wisdom," Working Papers 227, ECINEQ, Society for the Study of Economic Inequality.
- Bernardi, Luigi & Fraschini, Angela, 2005. "Tax system and tax reforms in India," POLIS Working Papers 45, Institute of Public Policy and Public Choice - POLIS.
- Alesina, Alberto F & Rodrik, Dani, 1991.
"Distributive Politics and Economic Growth,"
CEPR Discussion Papers
565, C.E.P.R. Discussion Papers.
- Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
- Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
- Giovanni Andrea cornia, 2009.
"Income Distribution under Latin America’s New Left Regimes,"
Working Papers - Economics
wp2009_16.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
- Giovanni Andrea Cornia, 2010. "Income Distribution under Latin America's New Left Regimes," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(1), pages 85-114.
- Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli & Mariana Marchionni, 2009. "A Turning Point? Recent Developments on Inequality in Latin America and the Caribbean," CEDLAS, Working Papers 0081, CEDLAS, Universidad Nacional de La Plata.
- Eduardo Lora, 2007. "The State of State Reform in Latin America," World Bank Publications, The World Bank, number 6642, October.
- Breceda, Karla & Rigolini, Jamele & Saavedra, Jaime, 2008.
"Latin America and the social contract : patterns of social spending and taxation,"
Policy Research Working Paper Series
4604, The World Bank.
- Karla Breceda & Jamele Rigolini & Jaime Saavedra, 2009. "Latin America and the Social Contract: Patterns of Social Spending and Taxation," Population and Development Review, The Population Council, Inc., vol. 35(4), pages 721-748.
- Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
- Wang, Chen & Caminada, Koen, 2011. "Disentangling income inequality and the redistributive effect of social transfers and taxes in 36 LIS countries," MPRA Paper 32821, University Library of Munich, Germany.
- Rodrigo Cubero & Ivanna Vladkova Hollar, 2010. "Equity and Fiscal Policy," IMF Working Papers 10/112, International Monetary Fund.
- Paolo Manasse & Ugo Panizza & Laura Dos Reis, 2007.
"Targeting the Structural Balance ,"
6722, Inter-American Development Bank.
- Eduardo Engel & Alexander Galetovic & Claudio Raddatz, 1998.
"Taxes and Income Distribution in Chile: Some Unpleasant Redistributive Arithmetic,"
Documentos de Trabajo
41, Centro de Economía Aplicada, Universidad de Chile.
- Engel, Eduardo M. R. A. & Galetovic, Alexander & Raddatz, Claudio E., 1999. "Taxes and income distribution in Chile: some unpleasant redistributive arithmetic," Journal of Development Economics, Elsevier, vol. 59(1), pages 155-192, June.
- Eduardo M.R.A. Engel & Alexander Galetovic & Claudio E. Raddatz, 1998. "Taxes and Income Distribution in Chile: Some Unpleasant Redistributive Arithmetic," NBER Working Papers 6828, National Bureau of Economic Research, Inc.
- Christian Daude & Ángel Melguizo, 2010. "Taxation and More Representation?: On Fiscal Policy, Social Mobility and Democracy in Latin America," OECD Development Centre Working Papers 294, OECD Publishing.
- Giovanni Andrea Cornia, 2005. "Policy Reform and Income Distribution," Working Papers 3, United Nations, Department of Economics and Social Affairs.
- Yilmaz Akyüz, 2012. "The Staggering Rise of the South?," Working Papers 2012/3, Turkish Economic Association.
- Giovanni Andrea Cornia, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2010," Working Papers - Economics wp2012_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
- Bruno Martorano, 2012. "The Impact of Uruguay’s 2007 Tax Reform on Equity and Efficiency," Working Papers - Economics wp2012_06.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
- Seguino, Stephanie & Braunstein, Elissa, 2012. "The impact of economic policy and structural change on gender employment inequality in Latin America, 1990-2010," MPRA Paper 43261, University Library of Munich, Germany.
- Cornia, Giovanni Andrea, 2012. "Inequality Trends and their Determinants: Latin America over 1990-2011," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Giorgio Ricchiuti).
If references are entirely missing, you can add them using this form.