A concept and typology of tax reform for Latin America

Abstract

There is still no consolidated definition of tax reform in the public finance literature. This article proposes to present its own concept of tax reform. Together with the definition of tax reform the text presents a typology for the classification of these reforms. In order to apply the proposed concept and typology, a database of tax changes and reforms was built for Latin American countries between 1990 and 2004 with data from the Inter-American Development Bank. It was found that the tax reforms promoted in Latin America were characterized by focusing on relevant taxes on consumption and income, in order to raise revenue, and were implemented in a gradual manner and with overall incidence. The Latin American experience can be useful for Brazil, which for years has been trying to reform its tax system. Thus, gradual reforms, directed toward taxes of widespread incidence seem to have more chance of approval by the legislative body.

Keywords:
Tax Reform; Concept; Typology