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Tax collection in Latin America and the Caribbean is low in relation to its potential and does not reflect the huge social needs in the region. Public finances reflect an inequitable social and economic model, which perpetuates power concentration and discrimination, and are undermined by high rates of tax evasion and avoidance. Courageous reforms are urgently needed in order to achieve fiscal policies to help reduce entrenched inequalities in the region.
Despite economic growth and the reduction of both poverty and inequality that Latin America and the Caribbean (LAC) has experienced during the last decade, it still remains the most unequal region in the world.
LAC political and economic elites have shaped fiscal systems which, in general, have either very limited effectiveness in correcting inequalities, or actually serve to deepen them. For inequality and exclusion to be overcome, this fiscal injustice must urgently be confronted.
A fair and equitable fiscal system is one that consistently combines tax and public spending policies with tax and budget management.