OECD Comments On Chilean Taxes

by Ulrika Lomas, Tax-News.com, Brussels

20 January 2012

The Organisation for Economic Cooperation and Development (OECD) has released a report warning the government of the importance of addressing the nation's wealth gap as the country's decision-makers gears up to deliver significant tax reform.

In summary, the OECD said that given considerable uncertainties regarding the health of the world economy, more supportive macroeconomic policies may be needed in the short run. In the longer run - although the OECD noted "impressive progress" to date - the agency called for fiscal effort to reduce poverty and inequality, identifying it as a key challenge for the government.

“Redistributive transfers and progressive taxes are very limited. Better education and job opportunities for the poor would enable more Chileans to contribute to a more dynamic and productive economy and thus to higher welfare,” the OECD said.

The Organization has called for the government to implement a series of measures to help the nation to overcome the challenging environment of the global downturn and attain stronger growth and a more inclusive society in the longer run.

In discussing the government's fiscal plans, the OECD has supported proposals to bolster compliance and increase tax revenues to finance long-term spending increases, particularly to be targeted towards the education system. The body agreed that higher environmental taxes, as mooted recently by the country's finance minister, could be a particularly efficient source of new revenues. Support was also voiced for the reduction of regressive tax loopholes and of still-pervasive income taxes evasion to make the tax system more progressive.

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