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on Central and South America |
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Issue of 2017‒04‒02
four papers chosen by |
| By: | Alberto Barreix (Inter-American Development Bank); Juan Carlos Benítez (OECD Development Centre); Miguel Pecho (Inter-American Center of Tax Administrations) |
| Abstract: | This study documents the process through which standard tax reliefs and tax allowances reduce the taxable base of the Personal Income Tax (PIT) in Latin American countries by using the models developed in Taxing Wages in Latin America and the Caribbean 2016. The theoretical estimations on the personal income tax are complemented with data from the tax administrations. The study finds that the PIT is progressive, but only paid by a small proportion of formal high-wage earning individuals. On average, more than 80% of the PIT is paid by the richest ten per cent of the population but at average effective rates below the region’s average statutory minimum tax schedule rate. The combination of these factors results in the PIT having a scant revenue-raising capacity and a meagre impact on income redistribution. |
| Keywords: | Personal income tax, tax deductions, tax exemptions, tax system, wage distribution |
| JEL: | D31 H24 |
| Date: | 2017–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:338-en&r=lam |
| By: | Bogliacino, Francesco; Rojas Lozano, Daniel |
| Abstract: | In this article, we show the evolution of inequality for the largest economies of the Latin American region in the 21st century, with separate consideration of income and wealth. We analyse the drivers of the changes in inequality and possible underlying causes, including the role of the new wave of leftist governments. |
| Keywords: | inequality; new left; income; wealth; social policy |
| JEL: | D63 H53 N16 N36 P52 |
| Date: | 2017–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:77803&r=lam |
| By: | Miguel Angel Santos (Center for International Development at Harvard University); Luis Espinoza (Center for International Development at Harvard University); Ricardo Hausmann (Center for International Development at Harvard University) |
| Abstract: | Panama has been one of the fastest growing economies in the world over the previous decade. Growth has been spearheaded by the development of a modern service sector on the activities surrounding the Canal, and non-residential construction. Large public infrastructure projects and the private provision for infrastructure demanded by the service sector, have fueled growth and created a vibrant labor market for non-skilled workers. Two warning signals hover over Panama´s stellar performance. The construction sector has been growing for a decade at a rate that is equivalent to doubling its stock of structures every four years. The demand for non-residential construction cannot grow indefinitely at a higher rate than the rest of the economy. This feeds into the second signal: Income inequality. In spite of the minor improvements registered over the accelerated-growth spell, Panama remains amongst the world´s top five most unequal countries. Both warning signals point out to the need of further diversifying the Panamanian economy, and promoting economic activity in the provinces so as to deconcentrate growth and make it more inclusive. We deployed our Growth Diagnostic methodology in order to identify potential binding constraints to that process. Skilled labor, necessary to gradually diversify into more complex and high value-added activities, is relatively scarce. This scarcity manifests into large wage-premiums to foreigners across all occupations, which are particular large within more complex industries. Major investments in education have improved indicators of schooling quantitatively, but quality remains a major concern. We find that Panama’s immigration policies are preventing skills from spilling over from their special economic zones into the rest of the economy. On top of that, the list of professions restricted to Panamanians and other constraints on skilled labor flows, are constraining even further the pool of skills. As we document here, these efforts are not helping the Panamanian workers, quite the contrary. We also find that corruption, and to a lesser extent, red tape, are other important factors that shall be addressed in order to allow Panama to shift the gears of growth, tackle inequality and continue growing at a fast pace. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:325&r=lam |
| By: | Ricardo Hausmann (Center for International Development at Harvard University); Jose Ramon Morales Arilla (Center for International Development at Harvard University); Miguel Angel Santos (Center for International Development at Harvard University) |
| Abstract: | The economy of Panama has thrived for more than a decade, based on a modern service sector on the activities surrounding the Canal. Panama has inserted its economy into global value chains, providing competitive services in logistics, ship handling, financial intermediation, insurance, communication and trade. The expansion of the modern service sector required significant non-residential construction, including office buildings, commercial outlets, warehouses, and even shopping malls. Large public infrastructure projects such as the expansion of the Canal, the Metro, and Tocumen airport, have provided an additional drive and paved the road for productive diversification. But productive diversification does not spread randomly. A country diversifies towards activities that demand similar capacities than the ones already in place. Current capabilities and know-how can be recombined and redeployed into new, adjacent activities, of higher value added. This report identifies productive capabilities already in place in Panama, as signaled by the variety and ubiquity of products and services that is already able to manufacture and provide competitively. Once there, we move on to identifying opportunities for productive diversification based on technological proximity. As a result, we provide a roadmap for potential diversification opportunities both at the national and sub-national level. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cid:wpfacu:324&r=lam |