Latin America: taxes for the poor and privileges for the rich

In Latin America, the average tax burden (the amount of taxes the state collects relative to the size of the economy) stands at a meager 2.5% of GDP, a ridiculous figure compared with the 34% averaged by the developed countries of the Organisation for Economic Co-operation and Development (OECD).

But what is truly scandalous is not only how much is collected, but from whom.

In our countries, the tax system is upside down: most revenue comes from the value-added tax (IVA), an indirect tax that the billionaire who buys a yacht and the single mother who buys a liter of milk for her children pay alike. Meanwhile, large corporate fortunes, financial casino profits and mining concessions enjoy a feast of tax exemptions, opaque trusts and legal loopholes that allow them to pay miserable effective rates.

Conservative technocrats repeat the worn-out script that "raising taxes on the rich scares off investment." This is a monumental lie. Quality productive investment flees countries with destroyed roads, obsolete power grids and sick, uneducated populations.

Genuine Latin American integration will not be achieved through one-sided free trade agreements or absurd tax exemptions for the rich, but by harmonizing our tax laws to prevent capital from fleeing to offshore havens and by building a social pact in which those who earn the most pay their fair share to finance the development of the whole of society.