Chile on Trial: Moisés Naím and Sergio Bitar
Chile has been rocked with corruption scandals and political unease. Two of Latin America’s leading thinkers discuss why.
This paper applies a comprehensive tax-benefit incidence analysis to estimate the distributional effects of fiscal policy in Chile in 2013. Four results are indicative of an overall positive net effect of fiscal interventions on poverty and inequality. First, subsidies exert a positive, yet modest effect on poverty and inequality, whereas direct transfers are progressive, equalizing, and reduce the poverty headcount by 4 to 5 percentage points, depending on the poverty line used. Second, although social contributions are unequalizing and poverty-increasing, direct taxes on personal income are equalizing and povertyneutral, whereas indirect taxes are poverty-increasing but exert a counterintuitive, yet feasible equalizing effect known as Lambert’s conundrum. Third, social spending on tertiary education is slightly equalizing but it is not pro-poor, contrary to the effects of social spending on basic and secondary education and health, which are not only equalizing but also pro-poor. Finally, the net effect of Chile’s tax/transfer system leaves fewer individuals impoverished relative to the number of fiscal gainers, and the magnitude of monetary fiscal gains is significantly higher than that of fiscal impoverishment.
Chile has been rocked with corruption scandals and political unease. Two of Latin America’s leading thinkers discuss why.
Given their close proximity to the United States, LAC countries are well-positioned to capitalize on the surplus of US gas exports and current buyer’s market.
With the recent decline in commodity prices, why have some countries have fared better than others?