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.

Panel Members

Richard Blundell (300x300)

Richard Blundell

University College London and Institute for Fiscal Studies (IFS)

Santiago Levy (300x300)

Santiago Levy

Brookings Institution

Facundo Alvaredo (300x300)

Facundo Alvaredo

Paris School of Economics and École des Hautes Études en Sciences Sociales

Nora Lustig (300x300)

Nora Lustig

Tulane University

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