Taxes income tax tax reform Value Added Tax (VAT) raising taxes taxes Increased taxes reforms tax evasion Economics Government Asamblea Legislativa (Costa Rica) Chamber of Commerce of Guatemala Economic Commission for Latin American and Caribbean Enrique de Obarrio

Central America: More Taxes Necessary

"If we want first-world services, we must pay first-world taxes" - Laura Chinchilla.

Thursday, November 19, 2009

©image: Balazs Gal

The tax burden in Central America hovers between Guatemala's 9.9% and Nicaragua's 17%. In Brazil its 29%, whereas Scandinavian countries have tax burdens around 40%.

Tax collection has been hardly hit by the economic crisis, making evident the need for fiscal reforms to solve the structural problems of the region's tax systems.

Inequity is one of the many problems in need of a solution. A Prensalibre.com article reports that "70% of all tax revenue comes from indirect taxes, with just 30% coming from individual and corporate income".

Source: prensalibre.com

Countries

Central America

Insight

indirect taxes income distribution tax exemptions Value Added Tax (VAT) tax evasion raising taxes Increased taxes income tax tax reform tax reform Public Services Economics Taxes

Tax Reforms in Central America

December 2009

2010 will be a difficult year for the region's Treasuries, and tax reforms will be one of the weapons used by governments to fight this crisis.

Nicaragua has recently passed a highly controversial fiscal reform. Panama approved tax hikes for companies in the Colón Free Zone, as well as tobacco, casinos and insurance companies.

Tax Changes in Costa Rica

March 2012

Already approved in the first instance, the draft Law on the Solidarity Tax involves substantial changes which will in general raise taxes on productive and commercial activities.

An article in Elfinanciero.com.cr reviews the main consequences of the adoption of the fiscal plan.

Guatemala Needs More Tax Revenue

February 2011

Federico Linares, CEO of G & T Continental, stated the need for fiscal reform.

Linares believes that current tax burden of around 10.5% of GDP is too low to support development of the country, adding that a tax reform is essential, though it seems difficult especially in an election year.

Fiscal Policies and Systems

March 2010

High taxes and evasion eroding economic growth in Latin America and the Caribbean.

New IDB study says governments must simplify tax systems and reduce evasion

Complex tax systems and widespread evasion are distorting investment decisions by companies in Latin America and the Caribbean, reducing the efficiency of markets and preventing governments from investing in infrastructure, education and other key public goods.

close (x)