OECD Development Centre Working Papers

ISSN: 
1815-1949 (online)
http://dx.doi.org/10.1787/18151949
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The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.
 

Revisiting personal income tax in Latin America

Evolution and impact You or your institution have access to this content

English
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Author(s):
Alberto Barreix1, Juan Carlos Benítez2, Miguel Pecho3
Author Affiliations
  • 1: Inter-American Development Bank, United States

  • 2: OECD Development Centre, France

  • 3: Inter-American Center of Tax Administrations, Panama

30 Mar 2017
Bibliographic information
No.:
338
Pages:
35
http://dx.doi.org/10.1787/16d42b4a-en

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This study documents the process through which standard tax reliefs and tax allowances reduce the taxable base of the Personal Income Tax (PIT) in Latin American countries by using the models developed in Taxing Wages in Latin America and the Caribbean 2016. The theoretical estimations on the personal income tax are complemented with data from the tax administrations. The study finds that the PIT is progressive, but only paid by a small proportion of formal high-wage earning individuals. On average, more than 80% of the PIT is paid by the richest ten per cent of the population but at average effective rates below the region’s average statutory minimum tax schedule rate. The combination of these factors results in the PIT having a scant revenue-raising capacity and a meagre impact on income redistribution.
Keywords:
Personal income tax, tax deductions, tax exemptions, tax system, wage distribution
JEL Classification:
  • D31: Microeconomics / Distribution / Personal Income, Wealth, and Their Distributions
  • H24: Public Economics / Taxation, Subsidies, and Revenue / Personal Income and Other Nonbusiness Taxes and Subsidies
 
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