Theme Four
Taxation and Redistribution
Pre-fiscal inequality in LAC is among the highest in the world. However, existing analyses suggest that while fiscal policy reduces inequality, this reduction is small relative to the potential in LAC. In some countries, fiscal policy is poverty-increasing.
On the revenue side, a system that is heavily tilted towards consumption taxes and with limited progressivity in income taxes does not redistribute much either. Pension systems in LAC are often regressive. Workers who transit between the formal and informal sectors during their careers do not make sufficient contributions to obtain the right to a contributory pension, while paying payroll taxes that are effectively subsidizing the upper middle class and the rich.
The fourth theme explores the limited role that fiscal redistribution plays in the region to level the playing field. It addresses issues of equity and efficiency on both the revenue and expenditure sides of the government’s balance sheet.
How considerable is the redistributive power of tax systems in Latin America?
Gain insights about the region’s fiscal dynamics and its implications for development in our working papers by clicking on the links below:
Fiscal Policy, Income Redistribution, and Poverty Reduction in Latin America
The political economy of redistribution and (in)efficiency in Latin America and the Caribbean
Health systems and health inequalities in Latin America
Calculating the redistributive impact of pension systems in LAC
Cash transfers, poverty, and inequality in Latin America and the Caribbean
Panel Members
![Orazio Attanasio (300x300)](/LACIR-Images/People-LACIR/Orazio-Attanasio-300x300.xff07f505.jpg?h=270&w=270&q=75&f=webp&fit=crop)
Orazio Attanasio
Yale University
![Richard Blundell (300x300)](/LACIR-Images/People-LACIR/Richard-Blundell-300x300.x0096ea57.jpg?h=270&w=270&q=75&f=webp&fit=crop)
Richard Blundell
University College London and Institute for Fiscal Studies (IFS)
![Santiago Levy (300x300)](/LACIR-Images/People-LACIR/Santiago-Levy-300x300.xe172024c.jpg?h=270&w=270&q=75&f=webp&fit=crop)
Santiago Levy
Brookings Institution
![Facundo Alvaredo (300x300)](/LACIR-Images/People-LACIR/Facundo-Alvaredo-300x300.x4bcd2b9f.jpg?h=270&w=270&q=75&f=webp&fit=crop)
Facundo Alvaredo
Paris School of Economics and École des Hautes Études en Sciences Sociales
![Nora Lustig (300x300)](/LACIR-Images/People-LACIR/Nora-Lustig-300x300.xbf0eddf5.jpg?h=270&w=270&q=75&f=webp&fit=crop)
Nora Lustig
Tulane University
![Ana De La O Torres (300x300)](/LACIR-Images/People-LACIR/Ana-De-La-O-Torres-300x300.x953cbce4.jpg?h=270&w=270&q=75&f=webp&fit=crop)
Ana De La O Torres
Yale University