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There’s no new normality without new taxation in Latin America

Exposing the gross inequality that is embedded in the region's tax systems is the first step in beginning to change it.

Auska Ovando
24 December 2020, 12.22pm
People line up outside a bank in Santiago, Chile, March 20, 2020.
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Jorge Villegas/PA Images/Todos los derechos reservados

In Latin America, as in the rest of the world, governments have put their hands on their wallets to face the multidimensional crisis brought by the pandemic. Although spending has been unprecedented, the results show that it is not enough for a region that was already the most unequal in the world, and that will regress an estimated 15 years in poverty reduction.

The crisis has not only forced us to rethink daily hygiene and health systems, but also development models and how we conceive community life when we realize that civilization is more fragile than we thought. At the base of all these questions are a series of rules from which emanate the inequalities that Latin Americans face in their daily lives: taxes and how these are regulated in the States.

The payment of taxes to the State should work in such a way that all citizens, and especially those who have more, contribute to building a system of social protection so that no one is left without access to rights such as life, health, education, among others. The problem comes when those who have more evade the responsibility they have with the State, and worse, the State gives them exemptions and benefits so that they do not have to comply with it.

Tax evasion and tax spending by Latin American States (i.e., what is not recognized because it benefits companies) impacts the lives of millions of people in the region.

DataIgualdad.com, a platform for visualizing data on taxation and inequality created by Oxfam and Ciudadanía Inteligente, shows how tax evasion and tax spending by Latin American States (i.e., what is not recognized because it benefits companies) impacts the lives of millions of people in the region. The new edition of the project focuses on indicators specifically linked to the pandemic.

On the site people can review different indicators. For example, how many mechanical fans could be purchased with the money businesses evade in a year in income tax (5,362,078 across the region), or how many laptops with a year's worth of Internet could be paid with the amount people evade from this same tax (nearly 60 million).

Exposing the gross inequality that is embedded in the region's tax systems is the first step in beginning to change it. Amid an unprecedented crisis, it is urgent to understand that there will not be a true and fair new normality if there is no new taxation. The political will is moving, pressured by the citizenry, and this is the moment when we must be more active than ever to push the limits of what has been thought possible.

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