Tax discussions are permanent in all countries, and an issue that is discussed with special intensity at the political level. A key aspect for a reasonable discussion is to make an international comparison, to know at what level the tax burden of each country with respect to others. It is not a definitive element, since it is also important to know what the return on public services and investments is, based on that collection of taxes.
On the other hand, many countries have resources for the State that do not come through traditional tax schemes, but through contributions for the exploitation of natural resources. There is also mandatory income through the individual contribution social security system.
This is why, in recent years, tax experts from the IDB They add these additional income to the general collection to establish what they call the Equivalent fiscal pressure (PFE). In this way, countries like Chile have a tax pressure greater than that which arises from the traditional measurement, for the simple reason that the Chilean State has additional income from the exploitation of copper and other minerals, in addition to the mandatory contributions to the social security system through individual savings. In another example, Paraguay It also has additional resources from energy sales from its large hydroelectric dams.
These figures and the analysis were published in the blog “Recaking well-being”, of the IDBin a note from the experts Alberto Barreix, Ubaldo Gonzalez de Frutos and Santiago Díaz de Sarralde.
Barreix was one of the consultants who collaborated with the design of the Tax reform that implemented Uruguay in the first government of Wide Frontand has collaborated with similar processes in other countries in the region.
In the case of Uruguaythe State does not have additional income from the exploitation of natural resources, but it does establish mandatory contributions to the social Security for the individual savings pillar, which are added together to establish your own PFE level.
Incorporating these factors, Uruguay It is the country with the third highest tax burden in the region, ranking only below Argentina and Brazil, countries that have a significant tax burden, which many economists consider excessive. The comparison is illustrated in the attached graph.
In fact, even excluding the additional income, Uruguay is close to the podium (disputes third place with Barbados, small Caribbean nation). The PFE is almost at 35%. Without the additional income, the tax burden still exceeds 31%.
The Minister of Economy, Azucena Arbeleche, has vindicated the government’s decision to lower taxes (which implies a fiscal resignation of 150 million dollars for this year), in the face of criticism from the opposition and independent economists, that the fiscal situation does not allow it. He fiscal deficit projected for this year is 3% of GDP.
Source: Ambito
