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Taxation and Inequality in Developing Countries: Lessons from the Recent Experience of Latin America
Author(s) -
Martorano Bruno
Publication year - 2018
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.3350
Subject(s) - latin americans , inequality , economics , tax revenue , developing country , public economics , revenue , development economics , direct tax , tax reform , economic growth , political science , finance , mathematical analysis , mathematics , law
This paper aims to advance understanding about the relationship between taxation and inequality in developing countries, focusing on the recent experience of Latin America. Tax changes promoted equality since the early 2000s. In particular, the increasing contribution of direct taxes with respect to indirect taxes promoted the progressivity of the tax system and contributed to the reduction of inequality. Yet the effectiveness of taxation in promoting equality in Latin America is still limited by several factors such as the low average tax revenue, the inability to tax top incomes and the low contribution of taxes on property. © 2018 UNU‐WIDER. Journal of International Development published by John Wiley & Sons, Ltd.