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Coronavirus threatens the tax revenues in Latin America and Caribbean

Coronavirus threatens the tax revenues in Latin America and Caribbean

The pandemic, which has already reached almost 4 million infections and caused more than 270,000 deaths in the world, is threatening to escalate the worst recession in the history of Latin America.
The pandemic of the new coronavirus and poor global economic prospects threaten the progress in tax collection that Latin America had made in 2018, various international organizations alerted in a report Thursday.

The study "Tax Statistics in Latin America and the Caribbean 2020" revealed that tax revenues in the region reached an average of 23.1% of gross domestic product (GDP) in 2018 , the highest level ever recorded and which represents an increase in 0.4% over the previous year.

The income from taxes, however, remains well below the Organization for Economic Cooperation and Development (OECD) average, which in 2018 was 34.3%.

"The limited generation of tax revenues in Latin America restricts the space for spending on public services, including health, and raises questions about how social protection measures will be financed to respond to the pandemic", warned the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).

The COVID-19 pandemic, which has already caused more than 3.95 million infections and more than 270,000 deaths in the world, will cause the worst recession in the history of Latin America, due to the stoppage of trade and tourism, in addition to low price of raw materials, according to the latest ECLAC estimates.

Looking to the future, added the UN body , "it will be necessary for the region's economies to strengthen the role of tax systems to stimulate inclusive development and channel their public finances towards a more sustainable base."

Together with the Chile headquartered ECLAC, OECD, Inter-American Development Bank (IDB) and Inter-American Center of Tax Administrations (CIAT) participated in the ninth edition of this study.
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