Tackle tax evasion, Latin America told

2 Jul 19

Latin American and Caribbean countries must bolster their capacity to mobilise public revenues by strengthening tax collection if they are to achieve the Sustainable Development Goals.

This requires slashing high levels of tax evasion and avoidance – equivalent to 6.3% of the region’s GDP  in 2017 or $335bn – according to the head of the Economic Commission for Latin America and the Caribbean.

The United Nations organisation has made a series of recommendations to broaden countries’ fiscal space, promote public spending and investment, and strengthen multilateral and regional ties in order to tackle evasion.

“One of the major problems of Latin America and the Caribbean is evasion: $335bn,” said Alicia Bárcena, ECLAC’s executive secretary.

“That is a lot of money. We must strengthen fiscal space by bolstering tax revenue.” 

Bárcena was speaking at the launch of ECLAC’s Fiscal Panorama of Latin America and the Caribbean 2019 in Washington.

She said it was crucial to strengthen governments’ capacity to mobilise the domestic resources that will be needed to finance fulfilment of the SDGs under the UN’s 2030 Agenda.

The head of ECLAC proposed bolstering fiscal space by strengthening tax revenue which required a determined effort to slash high levels of evasion and avoidance.

Governments also needed to make tax collection more progressive and explore other revenue sources such as taxes on the digital economy, environmental taxes, and those aimed at improving public health.

Bárcena noted that in order to broaden fiscal space, tax evasion must be reduced along with illicit financial flows stemming from the manipulation of international trade in goods – which reached $85bn in 2016, or 1.5% of regional GDP.

Governments also needed to strengthen the taxation of personal income and property and to reduce harmful tax competition between countries.

“The region’s debt has increased despite fiscal consolidation efforts,” she said.

“If you think that Latin America and the Caribbean is made up of middle-income countries that should be ‘graduated’ from official development aid, that is not true. We still have many gaps to fill.” 

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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