La experiencia del sistema de imposición a la renta en el Uruguay de los sesenta

This paper discusses the process of implementing income taxes in Uruguay during the period 1961-1973. The study examines the failure of a previous implementation in the twenties, detailing the positions of the various political parties which tended to appear again during the parliamentary debate prior to its implementation in the sixties. Then, the detailed features of the tax, the objectives followed by its implementation and the various modifications made to improve tax collection are discussed. This tax reform sought to stop state revenues rely mainly on indirect taxes on consumption and, instead, adjusting them to the contributory capacity of individuals through out a global income tax. This first attempt to implement an income tax reform failed for several reasons. In the first place, there was a contradiction between the purpose of redistribution and the purpose of development promotion that inspired this tax policy: there were several tax-exempt incomes to support productive investment that undermined the tax collecting purpose. Another problem was that the complex nature of the tax which made it difficult its proper enforcement. Finally, the implementation of an income tax reform in an economic-financial scenario dominated by an inflationary process affected the revenues of this tax because of the verification of the Olivera-Tanzi effect.