| By: |
Serven, Luis;
Lopez, J. Humberto;
Goni, Edwin |
| Abstract: |
Income inequality in Latin America ranks among the highest in the world. It
can be traced back to the unequal distribution of assets (especially land and
education) in the region. But the extent to which asset inequality translates
into income inequality depends on the redistributive capacity of the state.
This paper documents the performance of Latin American fiscal systems from the
perspective of income redistribution using newly-available information on the
incidence of taxes and transfers across the region. The findings indicate
that: (i) the differences in income inequality before taxes and transfers
between Latin America and Western Europe are much more modest than those after
taxes and transfers; (ii) the key reason is that, in con trast with industrial
countries, in most Latin American countries the fiscal system is of little
help in reducing income inequality; and (iii) in countries where fiscal
redistribution is significant, it is achieved mostly through transfers rather
than taxes. These facts stress the need for fiscal reforms across the region
to further the goal of social equity. However, different countries need to
place different relative emphasis on raising tax collection, restructuring the
tax system, and improving the targeting of expenditures. |
| Keywords: |
Taxation & Subsidies,Emerging Markets,Debt Markets,Economic Theory & Research,Poverty Impact Evaluation |
| Date: |
2008–01–01 |
| URL: |
http://d.repec.org/n?u=RePEc:wbk:wbrwps:4487&r=lam |