Fiscal policy has a key role in reducing tobacco use. According to the WHO FCTC, raising taxes has been one of the most effective measures by far. This is because an increase in taxes, directly affects the price, which in turn makes tobacco products less affordable. Pricier tobacco products have the positive effect of reducing tobacco initiation, prevalence, and consumption.
The war in Ukraine has produced a significant increase in energy costs that will likely delay the fiscal consolidation efforts already put in place by several governments in the region. This supply shock is also likely to fuel inflation and higher interest rates, adding further pressure on governments trying to service their debts. Higher domestic and global inflation has already led the Fed to increase its interest rates and reduce its balance sheet, for example. That, in turn, could generate capital outflows from the region and worsen financing conditions.
The tsunami that caused extensive destruction and loss of life in Tonga in January 2022 stressed the vulnerability of developing countries, especially small island developing states, to disasters triggered by natural hazards, such as earthquakes, floods, droughts, and tropical cyclones. Losses from damage to assets and disruption in services are estimated at $391 billion–$647 billion per year in these countries.
The economic contraction tracked by the COVID-19 pandemic has created large fiscal imbalances that will lead Latin American and Caribbean (LAC) governments to pursue fiscal consolidation policies to increase revenues and reduce expenditures.
In the tax realm, questions inevitably arise as to the adequacy of tax revenues and the equity of the proposed measures. That calls for analysis of how to mitigate taxes’ distributive impact to favor certain segments of taxpayers and ensure the simplicity of the measures’ implementation.
The streams of analysis on the UN climate change talks in Glasgow last December read like the opening of the Charles Dickens’ novel, A Tale of Two Cities: “It was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…”
Latin America and the Caribbean is one of the world’s most vulnerable regions to the impacts of climate change. This implies great challenges for governments and finance and planning ministries in particular.
Data compiled by NASA shows that 2020 was the hottest year globally on record, tied with 2016, when compared to the average temperature recorded between 1951 and 1980. Since the 1880s, the Earth's average temperature has risen more than 1°C and there is consensus that countries need to move far more aggressively to decarbonize their economies.
The development of digital technology has profoundly transformed information processes in all the spectrum of the public and private sectors. For Tax Administrations (TAs), organizations whose business processes (services and audit) are based on data, technology advancements are driving profound changes in the way they carry out their tax collection functions.
In memory of Juan C. Gómez Sabaini and Francisco de Paula Gutiérrez
The tax incentive for private investment most widely applied in the Latin American and Caribbean (LAC) jurisdictions (25) is a lower corporate income tax (CIT) rate in certain industries or specific regions.
If well designed and implemented, the reduced rate is a tool available to governments to foster employment, encourage the transfer of technology and capital, and promote the growth of less developed regions, and it is often applied to export-oriented sectors or zones.
Promoting private investment -both foreign and domestic – must be the cornerstone of any pro-growth fiscal policy in the post-pandemic period. Governments in Latin America and the Caribbean (LAC) must ensure that the design and implementation of such policies – which usually involve the use of tax incentives – protect tax revenues and attract the type of investment that can contribute to sustainable and equitable long-term growth.