By Mike Godfrey, From Tax-News.com, Washington

Tax revenues in Latin American and Caribbean countries rose slightly in 2014, despite a slowdown in economic growth, according to a report from the Organisation for Economic Cooperation and Development.

The average ratio of tax-to-gross domestic product (GDP) for LAC countries rose from 21.5 percent in 2013 to 21.7 percent in 2014. This was up from 21.4 percent in 2012 and 20.8 percent in 2011, Revenue Statistics in Latin America and the Caribbean says.

The March 16 report covers 22 Latin American and Caribbean countries and was produced jointly by the Inter-American Centre of Tax Administrations, the Economic Commission for Latin America and the Caribbean, the Inter-American Development Bank, the OECD, and the OECD’s Development Centre.

Although tax-to-GDP ratios are increasing across the LAC region, the report highlighted that the 21.7 percent average is still well below the 34.4 percent OECD average in 2014.

The report also found that the average LAC tax burden rose from 14.6 percent to 17.2 percent between 1990 and 2000, largely due to VAT revenues. After 2000, revenues from personal and corporate income taxes became the more important driver, the OECD said, and about half of the growth from 17.2 percent to 21.7 percent is attributed to these revenues.

Following strong growth over the past 25 years, general consumption taxes (mainly VAT and sales taxes) accounted for 31.2 percent of tax revenues in the LAC countries in 2013 (compared with 20.2 percent in OECD countries), whereas the share of specific consumption taxes declined to 18.3 percent (compared to 10.5 percent in the OECD), according to the report. Meanwhile, taxes on income and profits accounted for 27.4 percent of revenues on average in the LAC countries and social security contributions accounted for 16.6 percent (compared with OECD figures of 33.7 percent and 26.1 percent, respectively).

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IMAGE: cteast.co.nz