Fiscal Justice to Reduce Inequality in Latin America and the Caribbean

Overview

Latin America and the Caribbean (LAC) is still the most unequal region in the world, despite economic growth and the reduction of both poverty and inequality over the last decade.

Political and economic elites have shaped fiscal systems which, in general, have a very limited impact when it comes to correcting inequalities and in some cases have deepened them. Public finances in LAC reflect an inequitable social and economic model which perpetuates the concentration of power and discrimination. Government revenues are undermined by high rates of tax evasion and avoidance in a region with huge social needs.

This briefing paper calls for courageous reforms to create fair and equitable fiscal systems in LAC. By supporting quality essential social services and social protection mechanisms; by increasing the role of tax systems as instruments of the redistribution of wealth; by reducing the current high levels of tax evasion and tax avoidance; and by doing so through ensuring transparency in those reforms, a new fiscal system would help to address and reduce entrenched inequalities across the region.