Taxing Wages in Latin America and the Caribbean 2016

Abstract

This new publication is jointly undertaken by the OECD Development Centre and the OECD Centre for Tax Policy and Administration, the Inter-American Center of Tax Administrations (CIAT) and the Inter-American Development Bank (IDB). It provides details of taxes paid on wages in 20 economies inLatin America and the Caribbean. The information contained in the Report covers the personal income tax and social security contributions paid by employees, the social security contributions and payroll taxes paid by their employers and cash benefits received by families. The objective of the Report is to illustrate how personal income taxes, social security contributions and payroll taxes are calculated and to examine how these levies and cash family benefits impact on net household incomes. The results also allow quantitative cross-country comparisons of labour cost levels and of the overall tax and benefit position of single persons and families.

Labor Informality and Economic Political Accountability of Executive Incumbents in Latin America

“…Informal workers are generally defined as those workers who do not have contracts that have specific rules regarding the length of their jobs or stipulation of job security such as notice periods, severance payments, and/or definitions of just causes of dismissal (Gasparini & Tornarolli, 2009;Pages & Marquez, 1998). Additionally, because informal workers do not make social security contributions, they often do not have access to key social security benefits such as retirement or health insurance (Gasparini & Tornarolli, 2009;Gideon, 2007;Mesa-Lago, 2009;OECD et al, 2016;Salazar-Xirinachs & Chacaltana, 2018;Tokman, 2007). The lack of legal protections and social safety net resources put informal workers in a more vulnerable position than formal workers.…”

Country tables, 1990-2018 – Tax revenues

“…Chile, El Salvador and Mexico, for example, have shifted their public pension programme to a mostly privately fully funded pension system. In Colombia and Peru, private and public programmes compete and employees opt for one of them (OECD et al, 2015 [34] ; OECD/IDB/The world Bank, 2014 [35] ).…”

“…OCDE/BID/Banco Mundial, 2015 [35] ). Por otra parte, Argentina, Brasil y Uruguay siguen un modelo en el que los sistemas públicos y privados son complementarios.…”

Social Protection in East Africa

“…A final word of caution is required as countries across Africa look to scale up their social insurance schemes: the expansion of such arrangements in a context of high informality needs to be managed carefully to avoid generating a vicious circle whereby informality worsens and tax revenues decline. The experience of Latin America, where social security contributions account for almost the entire tax wedge between the cost of employment and a worker's take-home pay in many countries, shows how social security contributions create the same distortions as other labour taxes and thus have the same (potentially adverse) implications for employment and economic growth (OECD, CIAT and IDB, 2016). High contribution rates incentivise employers to hire informally, which not only leaves these workers reliant on state support in the event of loss of income but also reduces the resources available to the government to provide this support.…”