Rethinking Taxation In Latin America

This study of taxation in Latin America takes a novel approach to the subject, using a framework that posits three dimensions for studying taxes—historical, relational, and transnational. The book argues that: first, taxation should be understood as a relational concept and tax systems as a function of a strategic nexus between the state and society; second, that any analysis of tax systems across Latin America needs to take historical legacies of national tax systems into account; and finally, that transnational phenomena have significant implications for tax regime dynamics in Latin America. The essays included provide diverse and representative insights for a new understanding of taxation in Latin America and highlight the bottlenecks to the development of sustainable tax systems in the region, exploring new links between academic research and policy-making.

Taxation and Inequality in Latin America takes a heterodox political economy approach, focusing on Latin America, where current problems of taxation have existed for a century and great wealth contrasts with abject poverty. The book analyzes the relation of natural resource wealth, allocational politics and the limited role of taxation for redistribution, and progressive resource mobilization. By drawing on the political economy of tax regimes, the book considers the specific conditions of taxation in Latin America, which apply to a large part of the Global South and more than 100 countries specializing in the extraction and export of raw materials. This book will cover: taxation and the dominance of raw material export sectors; taxation and allocational politics; new perspectives on political economy and tax regimes. Scholars and advanced students of political economy, political science, development studies, and fiscal sociology will find several key issues in tax research from a novel angle. The book provides an analytical orientation that relates central questions of taxation to patterns of regional political economy, thereby opening up the debate with tax scholars from other world regions of the Global South.

A weakness of decentralization and overall tax reforms in Latin America is the lack of attention to adequate taxation at the subnational government. A reliance on shared taxes with extensive earmarking leads to weak subnational accountability and soft budget constraints. The paper explores the options for expanding subnational taxation in Latin America. A range of subnational tax instruments might be considered, but interactions between new tax assignments and the system of transfers is important from a political economy perspective.

This book identifies sources of power that help business and economic elites influence policy decisions.

The assignment of revenues in most developing and transitional countries to the central government has arguably facilitated irresponsible behavior by some subnational governments. One way to relieve this problem is to strengthen subnational tax regimes. The paper proposes two approaches to accomplish such strengthening in developing countries. The first—most applicable to large countries with important regional governments—is to establish subnational value-added taxes (VATs); the second is to replace the various unsatisfactory state and local taxes imposed on business by a low-rate value-added tax levied on the basis of income (production, origin) rather than consumption (destination).

This open access volume addresses the link between international taxation, the 2030 Sustainable Development Agenda and the medium-term revenue strategy concept. It also analyses how countries and governments can reinforce this link in current and future initiatives in international taxation, including the base erosion profit shifting project initiated by the Organization for Economic Co-operation and Development with the political mandate of the G20. It discusses the 2030 Sustainable Development Agenda that are relevant for taxation and assesses the current work done by international organizations, regional tax organizations and countries to achieve these Sustainable Development Goals. The contributions to this volume provide an interdisciplinary mix of expertise in tax law, international political economy, global governance and international relations. Through these different perspectives, this volume provides an elaborate reference and evaluation framework for multilateral cooperation on tax and development to strengthen the revenue system of developed and developing countries. This topical volume is of interest to students and researchers of the social sciences, law and economics, as well as policy makers working on taxation.

The Latin American Economic Outlook 2018: Rethinking Institutions for Development focuses on how institutions can underpin the foundations of a long period of sustained and inclusive growth and increased well-being. The report begins with an overview of the main macroeconomic challenges ...

The use of property tax incentives for business by local governments throughout the United States has escalated over the last 50 years. While there is little evidence that these tax incentives are an effective instrument to promote economic development, they cost state and local governments $5 to $10 billion each year in forgone revenue. Three major obstacles can impede the success of property tax incentives as an economic development tool. First, incentives are unlikely to have a significant impact on a firm's profitability since property taxes are a small part of the total costs for most businesses--averaging much less than 1 percent of total costs for the U.S. manufacturing sector. Second, tax breaks are sometimes given to businesses that would have chosen the same location even without the incentives. When this happens, property tax incentives merely deplete the tax base without promoting economic development. Third, widespread use of incentives within a metropolitan area reduces their effectiveness, because when firms can obtain similar tax breaks in most jurisdictions, incentives are less likely to affect business location decisions. This report reviews five types of property tax incentives and examines their characteristics, costs, and effectiveness: property tax abatement programs; tax increment finance; enterprise zones; firm-specific property tax incentives; and property tax exemptions in connection with issuance of industrial development bonds. Alternatives to tax incentives should be considered by policy makers, such as customized job training, labor market intermediaries, and business support services. State and local governments also can pursue a policy of broad-based taxes with low tax rates or adopt split-rate property taxation with lower taxes on buildings than land.State policy makers are in a good position to increase the effectiveness of property tax incentives since they control how local governments use them. For example, states can restrict the use of incentives to certain geographic areas or certain types of facilities; publish information on the use of property tax incentives; conduct studies on their effectiveness; and reduce destructive local tax competition by not reimbursing local governments for revenue they forgo when they award property tax incentives.Local government officials can make wiser use of property tax incentives for business and avoid such incentives when their costs exceed their benefits. Localities should set clear criteria for the types of projects eligible for incentives; limit tax breaks to mobile facilities that export goods or services out of the region; involve tax administrators and other stakeholders in decisions to grant incentives; cooperate on economic development with other jurisdictions in the area; and be clear from the outset that not all businesses that ask for an incentive will receive one.Despite a generally poor record in promoting economic development, property tax incentives continue to be used. The goal is laudable: attracting new businesses to a jurisdiction can increase income or employment, expand the tax base, and revitalize distressed urban areas. In a best case scenario, attracting a large facility can increase worker productivity and draw related firms to the area, creating a positive feedback loop. This report offers recommendations to improve the odds of achieving these economic development goals.