Revenue Statistics in Latin America and the Caribbean 2016

Revenue Statistics in
Latin America and the
Caribbean
1990-2014
XXVIII ECLAC Regional Seminar on Fiscal Policy
Santiago, Chile – March 16-17, 2016

Revenue Statistics in Latin America and the Caribbean
1990 - 2014

• Detailed, internationally comparable data on tax revenues in Latin
American and Caribbean (LAC) economies
• 22 LAC economies from 1990-2014
• Comparisons with the average for OECD economies (and on-line data
for 32 non-LAC countries)
• Based on OECD Revenue Statistics methodology, an essential 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)

I. Tax revenue trends 1990-2014
II. Tax structure
III. Fiscal revenues from non-renewable natural resources
IV. Future steps and conclusions

Tax revenues in LAC increased slightly in 2014, but continue
to be considerably lower than in most OECD countries
Total tax revenues in LAC and OECD, 1990-2014
(Percentage of GDP)
0
5
10
15
20
25
30
35
40
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Difference (A-B) LAC (22) (A) OECD (34) (B)

Wide national variations exist across LAC countries
(‘Americas Latinas’)
0 10 20 30 40
OECD (34)
LAC (22)³
Guatemala
Dominican Republic
El Salvador
Paraguay²
Bahamas
Panama
Venezuela²
Peru
Ecuador
Mexico²
Honduras
Chile
Colombia
Nicaragua
Costa Rica
Jamaica²
Uruguay
Trinidad and Tobago
Bolivia²
Barbados²
Argentina
Brazil
Total tax revenues in LAC countries and OECD, 2014
(Percentage of GDP)

Tax revenues rose significantly across the region over the
1990-2014 period
Tax to GDP ratios in LAC in 1990 and 2014
ARG
BHS
BRB
BOL
BRA
CHL
COL
CRI
DOM
ECU
SLV
GTM
HND
JAM3
MEX
NIC2
PAN
PRY
PER
TTO
URY
VEN2
5
10
15
20
25
30
35
40
5 10 15 20 25 30 35 40
2014
1990

Nevertheless, tax revenues barely increased between 2013
and 2014
Tax to GDP ratios in LAC in 2013 and 2014
ARG
BHS
BRBBOL
BRA
CHLCOL
CRI
DOM
ECU
SLV
GTM
HND
JAM
MEXNICPAN
PRY
PER
TTOURY
VEN
5
10
15
20
25
30
35
40
5 10 15 20 25 30 35 40
2013
2014

Tax revenues increase over GDP in 2014 was driven by
income taxes, and taxes on goods and services
-0.04 -0.02 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16
Property
Other income tax
Others
Payroll
Social security
Corporate income tax
Goods and services
Personal income tax
Tax revenues growth in LAC, 2014
(Percentage points of GDP)

I. Tax revenue trends 1990-2014
II. Tax structure: tax sources and administration
III. Fiscal revenues from non-renewable natural resources
IV. Future steps and conclusions

Tax collection in LAC is based on high indirect tax receipts
(general taxes), while direct taxation (i.e. personal) is low
Tax sources in LAC and OECD, 2013
(Tax collection as percentage of total tax revenues)
27.4
16.6
31.2
18.3
6.5
LAC (22)1
33.7
26.1
20.2
10.5
9.5
OECD (34)2
Taxes on income andprofits Social-security contributions General consumption taxes
Specific consumption taxes Other taxes

However, since the 2000s, taxes on income and profits have
increased their contribution…
0
10
20
30
40
50
60
1990
92
94
96
98
2000
02
04
06
08
10
12
2014
LAC
0
10
20
30
40
50
60
1990
92
94
96
98
2000
02
04
06
08
10
12
2014
OECD
Taxes on income and profits (1000) Social-security contributions (2000) Taxes on goods and services (5000)
Tax sources in LAC and OECD, 1990-2014

… notably thanks to the corporate income tax, but also to
personal income taxes
0
2
4
6
8
10
12
1990
92
94
96
98
2000
02
04
06
08
10
12
2014
LAC
0
2
4
6
8
10
12
1990
92
94
96
98
2000
02
04
06
08
10
12
2014
OECD
Personal income tax Corporate income tax Other income tax
Social-security contributions Taxes on goods and services
Tax sources in LAC and OECD, 1990-2014
(Percentage of GDP)

Again, tax structures reflects a wide variation across the LAC
region
Tax sources in LAC countries, 2014
0 20 40 60 80 100
OECD (32)²
LAC (22)³
Bahamas
Bolivia¹
Paraguay¹
Costa Rica
Argentina
Brazil
Uruguay
Ecuador
Panama
Barbados¹
Honduras
Nicaragua
Mexico²
Guatemala
Dominican…
Colombia
Venezuela¹
Chile
Jamaica¹
El Salvador
Peru
Trinidad…
Income and profits Property Social security contributions Payroll Goods and services Other

In the Americas Latinas, value added taxes raised more
revenues than income taxes in most countries…
VAT vs Income taxes in LAC countries and OECD, 2014
(Percentage of GDP)
0
5
10
15
20
25
VAT Taxes on income and profits

… mostly explained by weak personal income tax collection
Personal and Corporate income tax revenues in ALC countries and OECD, 2014
(Percentage of GDP)
Note: For OECD, the data for 2013 are used. The share of taxes on income and the share of taxes on profits may not add up to the total share of
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.
0
2
4
6
8
10
12
14
16
18
TTO PER COL CHL BOL HND BRA ARG SLV GTM DOM BRB URY CRI JAM OECD
Personal income tax Corporate income tax

Sub-national government finances are also limited in LAC…
Tax revenues by sub-sectors of general government in LAC and OECD, 2013
(Receipts as percentage of total tax revenue)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
LAC
OECD
Central government State or local Social-Security Funds Supranational

…with the exceptions of Argentina, Brazil and Colombia
Tax revenues by sub-sectors of general government in LAC countries, 2014
0 10 20 30 40 50 60 70 80 90 100
Venezuela
Uruguay
Trinidad and Tobago
Peru
Paraguay
Panama
Nicaragua
Mexico
Jamaica
Honduras
Guatemala
El Salvador
Ecuador
Dominican Republic
Costa Rica
Colombia
Chile
Brazil
Bolivia
Barbados
Bahamas
Argentina
LAC
Central government
Gobierno central
State or local Social-Security Funds
Fondos de seguridad social

Fiscal revenues from non-renewable natural resources are
key in half of the countries in LAC
Non-renewable natural resources revenues in LAC countries, 2014
(USD billion and percentage of GDP)
0 20 40 60 80 100
Jamaica
Suriname
Dominican Republic
Trinidad and Tobago
Bolivia (Plur. State of)
Peru
Chile
Argentina
Ecuador
Colombia
Brazil
Venezuela (Bol. Rep. of)
Mexico
As % of GDP
PEMEX
8.9
12.3
0.5
5.8
0.04
4.2
1.7
10.8
1.9
1.8
2.3
13.8
7.3

The reliance on non-renewable natural resources explains
the fall in total revenues in these countries in 2014…
2013 (r) 2014 (p) Δ 2013 (r) 2014 (p) Δ 2013 (r) 2014 (p) Δ
Argentina 1.8 1.9 0.1 1.7 1.8 0.1 0.1 0.1 0.0
Bolivia (Plur. State of) 14.2 13.8 -0.4 13.5 13.1 -0.4 0.7 0.7 0.0
Brazil 2.2 1.7 -0.5 1.8 1.6 -0.2 0.4 0.1 -0.3
Chile 2.1 1.8 -0.3 .. .. .. 2.1 1.8 -0.3
Colombia 5.1 4.2 -1.0 4.8 3.9 -0.9 0.4 0.3 -0.1
Dominican Republic 0.6 0.5 -0.1 .. .. .. 0.6 0.5 -0.1
Ecuador 12.1 10.8 -1.3 12.1 10.8 -1.3 .. .. ..
Jamaica 0.1 0.0 -0.1 .. .. .. 0.1 0.0 -0.1
Mexico 8.0 7.3 -0.8 7.8 7.0 -0.8 0.2 0.2 0.0
Peru 2.8 2.3 -0.5 1.9 1.6 -0.3 0.9 0.7 -0.3
Suriname 6.2 5.8 -0.4 5.5 5.0 -0.6 0.6 0.9 0.2
Trinidad and Tobago 11.7 12.3 0.5 11.7 12.3 0.5 .. .. ..
Venezuela (Bol. Rep. of) 12.2 8.9 -3.3 12.2 8.9 -3.3 .. .. ..
Latin America and the
Caribbean 6.1 5.5 -0.6 7.3 6.6 -0.7 0.6 0.5 -0.1
Country
Total Hydrocarbons1
Mining
Public revenues from non-renewable natural resources in LAC countries, 2013-2014
(Percentage of GDP)

… and more falls are to come in 2015
Non-renewable natural resource revenues in LAC countries, 2000-2015(e)
(Percentage of GDP)
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

Looking forward, commodity prices are not expected to return to
pre-2014 levels soon
Commodity prices
(Observed and forecasts ; index 100 = 2005)
0
50
100
150
200
250
2011 2012 2013 2014 2015 2016 2017
Minerals and metals Crude oil
Source: ECLAC, based on data from IMF

• Improve direct tax data
• Deepen the analysis on regional governments
• Broaden the analysis on commodity revenues (i.e. food)
• Continue expanding country coverage
• …
Future steps

Future steps (I): Within taxes on income and profits, there
is still room for improvement in data allocation
32%
61%
23%
LAC
76%
25%
2%
OECD
Personalincometax Corporateincometax Unallocableincometax

Future steps (II): Data and analysis by sub-sectors of
government merits (more) attention
Tax revenues by sub-sectors of general government in LAC countries, 2014
0 10 20 30 40 50 60 70 80 90 100
Venezuela
Uruguay
Trinidad and Tobago
Peru
Paraguay
Panama
Nicaragua
Mexico
Jamaica
Honduras
Guatemala
El Salvador
Ecuador
Dominican Republic
Costa Rica
Colombia
Chile
Brazil
Bolivia
Barbados
Bahamas
Argentina
LAC
Central government
Gobierno central
State or local Social-Security Funds
Fondos de seguridad social

Future steps (III): Public revenues from food commodities
are a relevant part of the tax story in the LAC region
Source: Alberola, I. Kataryniuk, A. Melguizo and R. Orozco (2015), “Fiscal policy and the cycle in Latin
America: the role of financial conditions and fiscal rules” , BIS Working Paper 543
Fiscal balance in Argentina, 2000-2013
(Percentage of GDP)
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013.0 2014
Commodity linked Argentina Primary balance Structural Primary balance

Future steps (and IV): Continue expanding country coverage
• Antigua and Barbuda
• Belize
• Cuba
• Dominica
• Grenada
• Guyana
• Haiti
• St. Kitts and Nevis
• St. Lucia
• St. Vincent and the Grenadines
• Suriname
• …

Conclusions (I): Beyond Americas Latinas, tax revenue
trends confirm LAC-OECD convergence has stalled
• The average tax burden in LAC increased from 21.5% in 2013 to 21.7% GDP
in 2014. This followed a rise of 1.5 percentage since 2010, reversing the
decline during the financial crisis
• The average tax burden in LAC countries is still far behind from the OECD
average (34.4% of GDP in 2013). The gap has remained steady at 13
percentage points since 2008
• There is a wide variation across countries. The tax to GDP ratios in LAC
countries range from 12.6% (Guatemala), 14.1% (Dominican Republic) and
16.5% ( El Salvador) to 30.4% (Barbados), 32.2% (Argentina) and 33.4%
(Brazil)

Conclusions (II): Tax structures in LAC countries are
centralised, and heavily based on indirect taxes
• Following strong growth over the past decades, general consumption taxes
(mainly VAT and sales taxes) account for nearly one third of tax revenues in
the LAC countries in 2013 (31.2%), compared with one fifth (20.2%) in OECD
• Contributions from direct taxes are significantly lower in LAC countries.
Taxes on income and profits accounted for 27.4% of revenues on average in
the LAC countries and social security contributions represented 16.6% (in
OECD the corresponding figures are 33.7% and 26.1% respectively)

Conclusions (III): Public revenues are decreasing in some
commodity-rich countries in LAC
• The sharp decline in international oil prices resulted in a significant
reduction of hydrocarbon-related revenues in the region (from 7.3% of GDP
in 2013 to 6.6% of GDP in 2014). Non-tax revenues bore the brunt of the
decline, falling sharply in Ecuador and Venezuela
• In 2015, hydrocarbon revenues are estimated to have returned to their pre-
boom level, falling from an average of 6.6% of GDP in 2014 to 4.5% of GDP
• Mining revenues were also affected by falling prices, dropping to 0.5% of
GDP on average from 0.6% of GDP in 2013. Tax revenues, derived mainly
from corporate income taxes, fell sharply as profit margins in the sector
tightened. The rise in production coupled with currency depreciations
served to smooth the shock

• Given the persistent economic slowdown and the weak price projections for
most commodities, a no-policy change scenario suggests that the gap in tax
revenues between LAC countries and the OECD will persist
• Some countries in the region are implementing/defining/debating structural
fiscal reforms that increase revenues. Sufficiency, efficiency, equity and
simplicity principles should drive these process, accompanied by institutional
improvements (e,g, fiscal frameworks, rules, councils)
• For non-renewable natural resources, institutions to ensure commodity booms
traslate into sustainable economic development should be implemented (e.g.
stabilisation funds)
Conclusions (and IV): Policy action is needed

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Revenue Statistics in Latin America and the Caribbean 2016

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Revenue Statistics in Latin America and the Caribbean 2016