THE NEXT STEP IN
IMPROVING EQUITY
TAX
REFORM
If governments want to continue improving
economic equality, they have to address
their regressive and ineffective tax systems.
Juan Pablo Jiménez & Isabel López Azcúnaga
In the last decade, inequality has decreased in the majority of countries in Latin Amer- ica. This historic shift was largely the result of unprecedented, steady economic growth and increased public spending that targeted the most vulnerable populations—mainly through conditional cash transfer programs. Nevertheless, income inequality is still unacceptably high. With a Gini coefficient of 0.52, Latin America and the Caribbean remains the most unequal region in the world.
The average income of the wealthiest quintile is 14. 5 times higher than the poorest—a ratio
greater than that of other developing regions, such as Sub-Saharan Africa ( 9. 1), East Asia and
Pacific ( 7. 7), Middle East and North Africa ( 6. 4), and South Asia ( 6. 1).
The differences are even starker when measured by decile—indicating the concentration
of wealth in the highest economic strata. In Latin America the richest decile exceeds 27. 9
times the income of the poorest decile, a concentration that is almost double Sub-Saharan
Africa, the region with the next greatest concentration of income, whose ratio is 15. 6 times.
Addressing the region’s endemic inequality and its features, though, is going to require
tackling distortions of state fiscal policy; in particular, it will mean addressing how tax policy could play a more important role in the redistribution of income.
AMERICASQUARTERLY.ORG
137 Americas Quarterly SPRING 2012
