LatAm, Caribbean Eased Off Austerity In 2013

by Mike Godfrey, Tax-News.com, Washington

11 March 2015

Tax revenues in Latin America and the Caribbean (LAC) remained stable in 2013 and continue to be considerably lower, as a proportion of national income, than in most Organisation for Economic Cooperation and Development (OECD) countries, according to a recently released OECD report.

The report, entitled Revenue Statistics in Latin America and the Caribbean 1990-2013, shows that the average ratio of tax revenue to gross domestic product (GDP) in the 20 Latin American and Caribbean countries covered by the report was 21.3 percent in 2013, which was just 0.1 percent above the ratio in 2012. However, the tax-to-GDP ratio rose from 19.5 percent to 21.2 percent over the 2009-2012 period.

The report shows that tax revenues rose significantly across the region over the 1990-2013 period, pushing the average tax-to-GDP ratio up by seven percentage points, from 14.4 percent to today's 21.3 percent level. While this revenue boost has provided governments in the region with increased capacity to improve spending on social programs and physical infrastructure, the tax-to-GDP ratio is still 13 percentage points below the OECD average of 34.1 percent.

In 2013, the highest tax-to-GDP ratios among the 20 LAC countries were in Brazil (35.7 percent) and Argentina (31.2 percent). The lowest tax burdens were in Dominican Republic (14 percent) and in Guatemala (13 percent). Among OECD countries, tax burdens ranged from 48.6 percent in Denmark to 19.7 percent in Mexico.

Falling crude oil prices in the second half of 2014 are expected to push down revenues by as much as 1-1.5 percent of GDP in Bolivia, Ecuador, and Mexico. In general, fiscal revenues from non-renewable natural resources continue to be very important as a percentage of total revenues in many countries across the region, and in some cases – such as for Venezuela and Ecuador – account for more than 30 percent of total fiscal revenues, the report said.

TAGS: tax | Denmark | Venezuela | gross domestic product (GDP) | Organisation for Economic Co-operation and Development (OECD) | Ecuador | Mexico | Bolivia | Brazil | Dominica | Dominican Republic | Guatemala | revenue statistics | Argentina | Tax

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