Tax reforms must play a central role in a country’s medium- and long-term development strategy. The report analyses some of the possible tax reforms in the Dominican Republic within a regional and international context of good practices. The fiscal recommendations are made within the context of the institutional frameworks, with particular emphasis on matters of economic policy that should be considered in the reform process.

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Tax in Latin America: Revenues are rising, but are still low and varied among countries

Tax revenues in Latin American countries are lower as a proportion of their national incomes than in most OECD countries, but are rising slowly.

Revenue Statistics in Latin America, shows that the average tax revenue to GDP ratio in the 15 Latin American countries covered by the report increased from 19% in 2009 to 19.4% in 2010 after falling from a high point of 19.7% in 2008.  

The report, produced jointly by CIAT, ECLAC and the OECD, notes that though the tax to GDP ratio did rise significantly across Latin American and Caribbean countries over the period 1990-2008 – by 5.8 percentage points compared to 1.5 for the OECD - at 19.4% in 2010 it is still far lower that the OECD average of 33.8%.

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 Overview

Latin America and the Caribbean (LAC) is still for many the region with the highest inequalities in the world, presenting major problems in the area of its fiscal performance. The LAC Fiscal Initiative is an OECD programme that fosters fiscal policy dialogue in the LAC region aiming to improve its taxation and public expenditure policies to support economic growth and income redistribution.

The programme is delivered through a regional forum for policy dialogue on fiscal issues (the LAC Tax Policy Forum), where senior fiscal policy officials of LAC countries can engage in dialogue with experts from the relevant OECD Committees and other regional organisations. This dialogue is supported by the development of internationally comparable data (e.g. the Revenue Statistics in Latin America publication), capacity building workshops and analytical papers that complement fiscal policy discussions. A third line of work consists of assisting countries with the design and implementation of fiscal reform measures.

Other key features of the LAC Fiscal Initiative:

• It is part of a broader OECD programme (the LAC Initiative) which fosters policy dialogue in the LAC region covering  several other areas beside fiscal issues - investment, public governance and innovation policies.
• It is a joint project between the OECD Centre for Tax Policy and Administration (CTPA) and the Development Centre (DEV) who work in close co-operation with key regional partners in the LAC region, especially CIAT, ECLAC and IDB.
• It is a demand driven programme - several Ministers of Finance in the LAC region expressed interest in working with the OECD on fiscal policy issues - which meets the specific needs of LAC countries by combining regional and country by country approaches.
• It is financed by voluntary contributions from OECD and participating countries.

Outcomes

1) Creation of a regional forum for fiscal policy dialogue:

• The first meeting of the LAC Tax Policy Forum was held in Panama City (Panama) on 16-17 September 2010; it was attended by over 60 experts, including representatives of the Ministries of Finance and/or Tax Administration of 14 Latin American and Caribbean countries and several OECD countries. It focused on the role of the tax system in reducing income inequality and promoting social cohesion, and served to identify tax incentives as the new priority topic.

• Second OECD - LAC Forum: Tax Incentives and Informality in a Time of Consolidation

  The Second meeting of the LAC Tax Policy Forum, jointly organised by CIAT, ECLAC, IDB and the OECD, and hosted by the Colombian Ministry of Finance and the National Tax and Customs Administration of Colombia (DIAN), was held in Bogotá on 12-13 July 2012.

• The next meeting of the LAC Tax Policy Forum will take place in Uruguay on 4-5 July 2013.

2) Tools to facilitate policy dialogue:

• Revenue Statistics in Latin America publication: this joint publication by CIAT, ECLAC and the OECD was launched in Santiago (Chile) on 25 January 2012 at the ECLAC’s XXIV Regional Seminar on Fiscal Policy. It aims at helping fiscal policy dialogue and the assessment of alternative fiscal reforms by providing internationally comparable data on tax levels and structures for, including data at sub-national government level. The publication follows the model of the OECD Revenue Statistics database, which enables meaningful cross-country comparisons about tax levels and structures not only between LAC economies, but also, for the first time, between them and their industrialised peers.
  A web platform to share this database and to foster virtual dialogue on fiscal issues has also been developed.

• Capacity building workshops and Seminars: several technical workshops and seminars for LAC fiscal officials have also been delivered as a complement for tax policy discussions.

2013 Capacity building workhops that will take place in the Multilateral Tax Centre in Mexico:

• Advanced Tax Treatis, 15-19 April
• Advanced Auditing MNEs, 13-17 May
• Transfer Pricing Aspects of the Extractive Industry, 1-5 July
• VAT policy (OECD-CIAT), 11-15 November
• Exchange of Information (OECD-CIAT), 9-13 December

• Publications on fiscal policy issues: several papers produced under the LAC Fiscal Initiative will contribute to the debate on fiscal policy in Latin America.
  
  
  • Working paper on Fiscal Policy in Latin America
  • Working paper on Taxation and More Representation
  • Making Reform Happen in Colombia: the process of regional transfer reform
  • Fiscal Policy for Development in the Dominican Republic

3) Assistance in the design and implementation of reform measures

• On a demand driven basis, two LAC countries have been assisted in the process of reform of their fiscal rules, analysing their budgetary position taking into account the business cycle and commodities prices.

Further information

Contact us

Any questions relating to the LAC Fiscal Initiative should be addressed to Katherine Perkins (E-mail: Katherine.Perkins@oecd.org)