This paper aims to advance understanding about the relationship between taxation and inequality in developing countries, focusing on the recent experience of Latin America. Tax changes promoted equality since the early 2000s. In particular, the increasing contribution of direct taxes with respect to indirect taxes promoted the progressivity of the tax system and contributed to the reduction of inequality. Yet the effectiveness of taxation in promoting equality in Latin America is still limited by several factors such as the low average tax revenue, the inability to tax top incomes and the low contribution of taxes on property.
- h23 - "Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies"
- h71 - State and Local Taxation, Subsidies, and Revenue
- d63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- o15 - "Economic Development: Human Resources; Human Development; Income Distribution; Migration"
- Latin America
- tax policy
- developing world
- income distribution
- socioeconomic status
- tax system