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Revenue Statistics in Latin America and the Caribbean 1990-2015
XXIX ECLAC Regional Seminar on Fiscal Policy Santiago, Chile – March 23, 2017
Revenue Statistics in Latin America and the
Caribbean 1990 - 2015
Revenue Statistics in Latin America and the
Caribbean
• Detailed, internationally comparable data on tax revenues in Latin American and Caribbean (LAC) economies • 24 LAC economies from 1990-2015 • Comparisons with the average for OECD economies (and on-line
data for 33 non-LAC countries)
• Based on OECD Revenue Statistics methodology, a reference source for OECD member countries
• Joint project with the Economic Commission for Latin America and the Caribbean (ECLAC) , the Inter-American Centre for Tax Administrations (CIAT), and Inter-American Development Bank (IDB)
Revenue Statistics in Latin America and the
Caribbean
Novelties • Expanded coverage to include Belize and Cuba
• Improved disaggregation of personal and corporate income
taxes (20 / 24 countries in 2015 vs 16/24 in 2014)
• Improved subnational data collection (17/24 in 2015 vs 13/24 in 2014)
• Estimations for subnational tax autonomy
• VAT-Revenue-Ratio (VRR) estimates
Revenue Statistics in Latin America and the
Caribbean
I. Tax revenue trends 1990-2015
II. Tax structure
III. Fiscal revenues from non-renewable natural resources
IV. Taxation and tax autonomy of subnational governments
V. Future steps and conclusions
LAC countries continued their convergence
process towards OECD taxation levels, despite the
economic slowdown
Total tax revenues in LAC and OECD, 1990-2015 (Percentage of GDP)
0
5
10
15
20
25
30
35
1990 91 92 93 94 1995 96 97 98 99 2000 01 02 03 04 2005 06 07 08 09 2010 11 12 13 14 2015
Difference B-A LAC (24) (A) OECD (35) (B)
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Wide national variations exist across LAC
countries (‘Americas Latinas’)
Total tax revenues in LAC countries and OECD, 2015 (Percentage of GDP)
0 5 10 15 20 25 30 35 40
OECD
LAC
Guatemala
Dominican Republic
Panama
Peru
El Salvador
Mexico
Paraguay
The Bahamas
Chile
Colombia
Nicaragua
Venezuela
Ecuador
Honduras
Costa Rica
Bolivia
Jamaica
Belize
Uruguay
Trinidad and Tobago
Barbados
Brazil
Argentina
Cuba
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Tax revenues increased for the majority of LAC
countries between 2014 and 2015…
Tax revenue growth by country, 2014-2015 (percentage points of GDP)
-2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5 3
Peru
Dominican Republic
Guatemala
Uruguay
Belize
Panama
El Salvador
Paraguay
Brazil
Colombia
Nicaragua
Costa Rica
Honduras
Trinidad and Tobago
Bolivia
Chile
Barbados
Jamaica
Argentina
Cuba
Ecuador
Venezuela
Mexico
The Bahamas
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
However, again, increases in tax revenues were
driven by different taxes in different countries
Tax revenues growth in LAC, 2014-2015 (Percentage points of GDP)
1000 Taxes on income, profits and capital gains
2000 Social security contributions
5000 Taxes on goods and services
Other taxes
-2
-1
0
1
2
3
4
5
p.p. of GDP Change in total tax revenue
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
… driven, on average, by taxes on goods and
services, and personal income taxes
Tax revenues growth in LAC by main tax aggregate, 2014-2015 (Percentage points of GDP)
-0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5
Corporate income tax
Payroll
Other taxes
Property
Social security
Personal income tax
Taxes on goods and services
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Changes in taxes on income, profits and capital
were mainly driven by changes in the corporate
income tax
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
p.p change
1100 Of individuals 1200 Corporate 1000 Taxes on income, profits and capital gains
Annual change in revenue from taxes on income and profits, corporate income tax and personal income
(Percentage points of GDP)
Note: Ecuador, Nicaragua and Venezuela are excluded as more than a third of their revenue from taxes on income and profits cannot be allocated to corporate income tax revenue (1200) or personal income tax revenue (1100). Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Revenue Statistics in Latin America and the
Caribbean
I. Tax revenue trends 1990-2014
II. Tax structure: How revenue is raised
III. Fiscal revenues from non-renewable natural resources
IV. Taxation and tax autonomy of subnational governments
V. Future steps and conclusions
Tax structures continue to be based on indirect tax
receipts (VAT and other taxes on consumption)
Tax revenue composition in LAC and OECD, 2015 (Percentage of GPD and total tax revenues)
1. Represents a group of 24 Latin American and Caribbean countries . Chile and Mexico are also part of the OECD (35) group. 2. Represents the unweighted average for OECD member countries in the year 2014. Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
6.2 p.p. (27%)
3.8 p.p.(16%)
0.8 p.p.(4%)
11.2 p.p.(49%)
0.9 p.p, (4%)
Taxes on income and profits Social security contributions Property
Taxes on goods and services Other taxes
11.5 p.p.(34%)
9.1 p.p.(27%)
1.9 p.p.(5%)
11.0 p.p. (32%)
0.7 p.p. (2%)
LAC (24)1 OECD (35)2
The region is slightly less reliant on indirect taxes
compared to two decades ago, while taxes on
profits have increased…
Main tax aggregates in LAC and OECD, 1990-2015 (Percentage of total tax revenues)
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
10
15
20
25
30
35
40
45
50
55
60
199
0
91
92
93
94
199
5
96
97
98
99
200
0
01
02
03
04
200
5
06
07
08
09
201
0
11
12
13
14
201
5
LAC
10
15
20
25
30
35
40
45
50
55
60
199
0
91
92
93
94
199
5
96
97
98
99
200
0
01
02
03
04
200
5
06
07
08
09
201
0
11
12
13
201
4
OECD
2
4
6
8
10
12
14
1990 91 92 93 94 1995 96 97 98 99 2000 01 02 03 04 2005 06 07 08 09 2010 11 12 13 14 2015
LAC
Taxes on income and profits Social security contributions Taxes on goods and services
2
4
6
8
10
12
14
1990 91
Taxes on income and profits accelerated their
ascent in the early 2000s, driven by the corporate
income tax (commodity cycle)
Revenue from various taxes in LAC, 1990-2015 (Percentage of GDP)
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean and OECD (2017), “Revenue Statistics in Latin America: Comparative tables”, OECD Tax Statistics (database)
2.4
4.6
6.0
2.2
4.0
0
1
2
3
4
5
6
7
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
Value added taxes Other taxes on goods and services Personal income tax Corporate income tax
Despite recent increases, personal income tax
collection continues to be low (vs CIT)
Personal and Corporate income tax revenues in ALC countries and OECD, 2015 (Percentage of GDP)
Note: the share on taxes on income and the share on taxes on profits may not add up to the total share on taxes on incomes and profits due to unallocable revenue. Only countries that could allocate 75% or more of revenue of taxes on incomes and profits into the sub categories taxes on income and taxes on profits are shown in the figure above.
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
0 3 6 9 12 15
LAC
OECD
The Bahamas
Bolivia
Paraguay
Guatemala
Dominican Republic
Colombia
Costa Rica
Chile
Panama
Peru
Honduras
Belize
Cuba
Brazil
El Salvador
Uruguay
Argentina
Mexico
Jamaica
Trinidad and Tobago
Barbados
PIT CIT
VAT raise more revenues than PIT in Latin American
countries, but not in the Caribbean
VAT and Income taxes in LAC countries and OECD, 2015 (Percentage of GDP)
0
1
2
3
4
5
6
7
8
9
10
BRB BOL CHL URY ARG BRA HND PER SLV PRY COL DOM TTO GTM CRI JAM MEX PAN BHS BLZ CUB LAC OECD
PIT VAT
Note: For OECD, the data for 2014 are used. the share on taxes on income and the share on taxes on profits may not add up to the total share on taxes on incomes and profits due to unallocable revenue. Only countries that could allocate 75% or more of revenue of taxes on incomes and profits into the sub categories taxes on income and taxes on profits are shown in the figure above. Brazil, Belize, The Bahamas, Barbados, Cuba and Trinidad & Tobago are excluded. Brazil operates a multiple rate system with tax levied at different rates for each sub-national level. Some underlying information was not available for Barbados, and Trinidad and Tobago; Belize, The Bahamas and Cuba did not operate a VAT system in 2014
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
VAT shows similar levels of performance than in
OECD countries
VAT Revenue Ratio (VRR) in 2014 (as a share of potential VAT revenue)
4.0
3.9
4.7
5.1
4.7
7.2
5.1
6.8
6.3
8.1
7.2
7.2
8.2
2.7
6.2
9.0
9.0
6.8
Revenue as % of GDP
Sources: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean and OECD (2016)
6.2
6.8
0 10 20 30 40 50 60 70 80 90 100
Bolivia
Paraguay
Venezuela
Ecuador
Panama
Chile
Peru
El Salvador
Uruguay
Nicaragua
Honduras
Guatemala
Argentina
Costa Rica
Colombia
Dominican Republic
Mexico
Jamaica
OECD
LAC
VRR Loss revenue
Revenue Statistics in Latin America and the
Caribbean
I. Tax revenue trends 1990-2014
II. Tax structure: How revenue is raised
III. Fiscal revenues from non-renewable natural resources
IV. Taxation and tax autonomy of subnational governments
V. Future steps and conclusions
Commodities’ prices declined sharply in 2015…
0
50
100
150
200
250
300
350
400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Index 100=2000
-36.3% -47.2%
-42
-30
-27
-23
-20
-18
-18
-11
-8
-8
-45 -40 -35 -30 -25 -20 -15 -10 -5 0
Iron ore
Nickel
Tin
Minerals and metals
Copper
Coal
Silver
Zinc
Gold
Lead
Percentage change on the basis of current USD
International reference price for crude oil Annual change of mineral and metal prices, 2014-15
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
2014 (r) 2015 (p) Δ 2014 (r) 2015 (p) Δ 2014 (r) 2015 (p) Δ
Argentina 1.8 1.7 -0.1 1.3 1.3 -0.1 0.4 0.4 0.0
Bolivia 13.1 10.4 -2.7 2.3 2.4 0.1 10.8 7.9 -2.9
Brazil 1.5 1.3 -0.2 0.9 0.9 0.0 0.7 0.4 -0.2
Colombia 4.3 2.5 -1.8 1.8 1.3 -0.4 2.5 1.1 -1.4
Ecuador 10.7 6.3 -4.3 0.0 0.0 0.0 10.7 6.3 -4.3
Mexico 7.0 5.9 -1.2 0.0 1.3 1.3 7.1 4.6 -2.5
Peru 1.6 0.9 -0.7 0.8 0.5 -0.2 0.8 0.4 -0.4
Suriname 5.2 0.5 -4.8 2.3 0.3 -2.1 2.9 0.2 -2.7
Trinidad and Tobago 12.3 7.7 -4.7 10.9 6.7 -4.2 1.4 0.9 -0.5
Venezuela 10.7 6.7 -4.0 2.5 0.8 -1.7 8.2 6.0 -2.3
Simple average 6.8 4.4 -2.4 2.3 1.5 -0.7 4.6 2.8 -1.7
CountryTotal Tax revenues Non-tax revenues
… which translated into a decline of public
revenues from hydrocarbons
Public revenues from hydrocarbons, by country and type of revenue, 2014-2015 (Percentages of GDP)
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Prospects of fiscal revenues from non-renewable
resources are still bleak
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Public revenues from non-renewable natural resources, 2000-2016 (Percentage of GDP)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0
1
2
3
4
5
6
7
8
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Per
cent
age
of G
DP
Per
cent
age
of G
DP
Hydrocarbons (10 countries, left axis) Mining (10 countries, right axis)
Notes: Mining covers Argentina, Bolivia, Brazil, Chile, Colombia, Dominican Republic, Jamaica, Mexico, Peru and Suriname. Hydrocarbons include Argentina, Bolivia , Brazil, Colombia, Ecuador, Mexico, Peru, Suriname, Trinidad and Tobago and Venezuela
Fiscal revenues from non-renewable natural
resources are (too?) important sources of revenue
Fiscal revenues from non-renewable natural resources, 2015 (in billions of dollars and percentage of GDP)
0 10 20 30 40 50 60 70
Jamaica
Suriname
Dominican Republic
Trinidad and Tobago
Peru
Chile
Bolivia
Ecuador
Colombia
Argentina
Venezuela
Brazil
Mexico6.1
As % of GDP
1.4
6.7
1.7
2.7
6.3
10.9
1.3
1.3
7.7
0.3
0.9
0.2
Revenue Statistics in Latin America and the
Caribbean
I. Tax revenue trends 1990-2014
II. Tax structure
III. Fiscal revenues from non-renewable natural resources
IV. Taxation and tax autonomy of subnational governments
V. Future steps and conclusions
Tax revenues are predominantly collected at the
central government level
Tax revenues by sub-sectors of general government in LAC and OECD, 2014 (Percentage of total tax revenue)
Note: Barbados, The Bahamas, Cuba, Dominican Republic, Nicaragua and Venezuela have been excluded since data is not available.
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
0 10 20 30 40 50 60 70 80 90 100
OECD
LAC
Central Government State or regional governments Social security
Tax revenues are predominantly collected at the
central government level
Tax revenues by sub-sectors of general government in LAC countries, 2014 (Percentage of total tax revenue)
Note: Barbados, The Bahamas, Cuba, Dominican Republic, Nicaragua and Venezuela have been excluded since data is not available.
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
0 10 20 30 40 50 60 70 80 90 100
OECD
LAC
Brazil
Costa Rica
Argentina
Panama
Uruguay
Colombia
Mexico
Ecuador
Paraguay
Honduras
Guatemala
Peru
Chile
El Salvador
Bolivia
Trinidad and Tobago
Belize
Jamaica
Central Government State or regional governments Social security
Subnational governments rely increasingly on
transfers from the central government…
Revenue sources composition in sub-national governments. Average for Latin America, 2000-2014
2.6 2.8 2.6 2.8 2.8 2.9 2.9 2.9 3.0 3.0 3.0 3.0 3.1 3.2 3.2
2.32.9 2.8 2.8 3.0 3.1 3.2 3.2 3.5 3.6 3.6 3.6 3.7 3.9 4.00.8
0.40.4 0.4 0.4 0.4 0.4 0.4
0.5 0.6 0.6 0.5 0.60.9 0.9
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Percentage of GDP
Own revenues Transfers Others
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
.. and collect revenue from few sources, mostly
based on indirect taxes
Tax revenues of subnational governments, by type of tax Average for Latin America, 2000-2014
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3
0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.5
1.4 1.3 1.2 1.3 1.3 1.3 1.4 1.4 1.4 1.4 1.4 1.5 1.5 1.5 1.6
1.8
0.20.2 0.2 0.2 0.2 0.2
0.2 0.2 0.2 0.2 0.1 0.1 0.20.2 0.2
0.2
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Percentage of GDP
Others Immovable property (4100)
Taxes on production, sale, transfer, etc (5100) Taxes on use of goods and perform activities (5200)
Measuring tax autonomy in Latin American
countries
Tax autonomy the measurement that assesses the degree of freedom with which sub-national governments can create or abolish new local taxes, define tax bases or even grant tax exemptions to natural persons and companies.
Tax autonomy classification criteria
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
Fiscal autonomy (relevant in some countries)
could be strengthen in LAC
Source: OECD/ECLAC/CIAT/IDB (2017), Revenue Statistics in Latin America and the Caribbean
More autonomy Less autonomy
Tax autonomy of subnational governments, 2014
Revenue Statistics in Latin America and the
Caribbean
I. Tax revenue trends 1990-2014
II. Tax structure
III. Fiscal revenues from non-renewable natural resources
IV. Taxation and tax autonomy of subnational governments
V. Future steps and conclusions
• Continue expanding country coverage
Haiti and Caribbean
• Improve data collection of subnational governments
• Expand the fiscal picture: statistics on tax expenditures (and on government expenditures)
Future steps
Conclusions (I): Beyond Americas Latinas, tax
revenue trends improved…
• Tax revenues have been resilient to the output decline in LAC. The average tax burden in LAC increased from 22.2% in 2014 to 22.8% GDP in 2015
• The average tax burden in LAC countries is still far behind from the OECD average (34.3% of GDP in 2015), but the gap is currently at its lowest (11.4 percentage points of GDP)
• Heterogeneity is a hallmark of the region. The tax to GDP ratios in LAC countries range from 12.4% (Guatemala), 13.7% (Dominican Republic) and 16.2% (Panama) to 32.0% (Brazil), 32.1% (Argentina) and 38.6% (Cuba)
Conclusions (II): … but many challenges remain
on consumption and direct taxes…
• Strong growth of VAT and excise taxes offset the decline of 0.2 percentage points of corporate income taxes
• Taxes on goods and services (mainly VAT and sales taxes) accounted for nearly half of tax revenues in the LAC countries in 2015 (49%), compared to one third (33%) in OECD in 2015
• Direct taxes collection is relatively low in LAC countries. Taxes on income and profits accounted for 6.2% of GDP, and social security contributions collected 3.8% of the GDP (vs 11.5% and 9.1% of GDP respectively in OECD)
Conclusions (III): … and on strengthening
subnational governments revenues
• Fiscal responsibility is eroded by high dependency on transfers from the central government. Currently, 49% of subnational governments total income is provided through transfers, while 40% come from tax revenues
• Sub-national governments rely on recurrent taxes on immovable property (16% of total subnational revenues), taxes on consumption (60%) and taxes on business and motor vehicle licenses (7%) for their tax revenues
• State governments in Argentina, Brazil and Mexico have a high levels of tax autonomy, whereas in Chile 58% of sub-national tax revenue is subject to tax-sharing agreements. Local governments have lesser autonomy
Conclusions (IV): In addition, the negative shock
on public revenues is substantial
• The sharp decline in international oil prices since the financial crisis resulted in a reduction of hydrocarbon-related revenues in the region (from 7.3% in 2013 and 6.6% in 2014 to 4.4% of GDP in 2015). An additional decline of 1.8 percentage points is expected in 2016
• Mineral and metal prices also decreased public revenues from
mining, which fell from 0.5% of GDP in 2014 to 0.4% in 2015, with a further fall to 0.3% estimated for 2016
(Commodity prices fell further in 2016 but less than in 2015)
Conclusions (V): Policy recommendations
• Given the economic slowdown and weak commodity prices, a no-policy change scenario suggests that tax revenues will not increase. Key to ensure the financing of education and infrastructure and social programmes.
• The design of the PIT can be improved, and so can the design of the VAT
• Central governments have a key role in supporting strengthening efforts for subnational governments (policy and institutions)
• The fiscal management of commodities should be strengthen before the next boom
• Tax reforms have to come, hand in hand, with improvements in their management. Latin American governments need to strive for more efficient, transparent and innovative services
Gracias!
www.latameconomy.org/es/revenue-statistics/
www.oecd.org/ctp/revenue-statistics-in-latin-america-and-the-caribbean-24104736.htm