IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

A New Fiscal Pact, Tax Policy Changes and Income Inequality

  • Cornia, Giovanni Andrea
  • Martorano, Bruno

The 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.

If 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.

File URL:
Download Restriction: no

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper WP2011/70.

in new window

Length: 34
Date of creation: 2011
Date of revision:
Handle: RePEc:unu:wpaper:wp2011-70
Contact details of provider: Postal: Katajanokanlaituri 6B, 00160 Helsinki
Phone: +358-9-6159911
Fax: +358-9-61599333
Web page:

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. 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.
  2. 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.
  3. Clements, Benedict J. & Faircloth, Christopher & Verhoeven, Marijn, 2007. "Public expenditure in Latin America: trends and key policy issues," Revista CEPAL, United Nations Economic Commission for Latin America and the Caribbean (ECLAC), December.
  4. 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.
  5. 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.
  6. Paolo Manasse & Ugo Panizza & Laura Dos Reis, 2007. "Targeting the Structural Balance ," IDB Publications (Working Papers) 6722, Inter-American Development Bank.
  7. 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.
  8. Alesina, Alberto F & Rodrik, Dani, 1991. "Distributive Politics and Economic Growth," CEPR Discussion Papers 565, C.E.P.R. Discussion Papers.
  9. 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.
  10. Rodrigo Cubero & Ivanna Vladkova Hollar, 2010. "Equity and Fiscal Policy: The Income Distribution Effects of Taxation and Social Spending in Central America," IMF Working Papers 10/112, International Monetary Fund.
  11. 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.
  12. 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.
  13. Bernardi, Luigi & Fraschini, Angela, 2005. "Tax system and tax reforms in India," POLIS Working Papers 45, Institute of Public Policy and Public Choice - POLIS.
  14. 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.
  15. 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.
  16. Eduardo Lora, 2007. "The State of State Reform in Latin America," World Bank Publications, The World Bank, number 6642.
  17. Giovanni Andrea Cornia, 2005. "Policy Reform and Income Distribution," Working Papers 3, United Nations, Department of Economics and Social Affairs.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:unu:wpaper:wp2011-70. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruck Tadesse)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.