revenue statistics in latin america and the caribbeanconferencias.cepal.org/politica_fiscal/jueves...

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


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)


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


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


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


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


… 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


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


Caribbean


II. Tax structure: How revenue is raised




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)


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.


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


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


Caribbean


II. Tax structure: How revenue is raised




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


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)


Prospects of fiscal revenues from non-renewable

resources are still bleak


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


Caribbean


II. Tax structure




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.


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.


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


.. 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


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


Fiscal autonomy (relevant in some countries)

could be strengthen in LAC


More autonomy Less autonomy

Tax autonomy of subnational governments, 2014


Caribbean


II. Tax structure




• 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

http://www.latameconomy.org/es/revenue-statistics/



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