木瓜影院

Main Messages

Chapter 1. Turning the Corner on Pandemic Disruptions: Time to Address Longer Term Challenges

Although growth estimates are slightly higher than before, Latin America and the Caribbean show less dynamism compared to other regions of the world. Challenges remain, however, to redress fiscal imbalances and reduce debt, recover lost earnings power, and regain the advances in reducing poverty of the previous decade. Nor is there any prospect for substantially higher growth, which would help address those challenges. Investment, both public and private, remains depressed, and data suggest that the region is potentially missing the boat on 鈥渘earshoring鈥� or 鈥渇riendshoring,鈥� the practice of bringing offshore operations to close or friendly countries. 

Overcoming post-pandemic imbalances presents a valuable opportunity to address a long-overdue reform agenda. This agenda, crucial for the country鈥檚 progress, covers key areas such as infrastructure, education, regulation, competition, and tax policy. In the short run, the stubbornness of poverty and inequality is leading some governments to recur to take more direct measures, such as raising minimum wages to support the poor鈥攚ith both positive and potentially negative consequences if not pursued with caution. Concerns have also surfaced about one dimension of poverty鈥攆ood insecurity and the cost of an unhealthy diet. 

Chapter 2. Why Tax Wealth?

Wealth taxes have moved to center stage in the global agenda, where such taxes are seen as a tool to reduce inequality, raise resources to fight global warming, and improve global governance. They also have the potential to raise growth, shifting the tax burden from productive investment鈥攁s noted, LAC鈥檚 taxes on firms are among the highest in the world鈥� toward assets with likely less negative impact on economic dynamism. While greater reliance on wealth taxes has potential to address these goals, experience from the advanced economies suggests challenges in administration and sometimes unintended consequences depending on what type of wealth tax is considered.

Reforming the regional tax systems with an eye toward greater reliance on property taxes could increase equity, promote growth and generate fiscal space. The benefits will not be automatic, however. Investments need to be made in administrative capacity, and proper valuation is necessary to ensure progressivity.