Inter-American Development Bank says Caribbean tax revenue under threat

By BBN Staff: The Jamaica Observer published a report on the Inter American Development Bank (IDB) and the deteriorating outlook for the Caribbean tax revenue.

The IDB notes that in 2018, the tax revenues in Latin America and the Caribbean increased to 23.1 percent of the Gross Domestic Product (GDP), however, this increase is now under threat as a result of the region’s deteriorating fiscal outlook.

This deteriorating is partly due to the global COVID-19 pandemic and the world’s economic outlook.

The ‘Revenue Statistics in Latin America in the Caribbean (LAC)’ noted the increase of 0.4 percent points from the level in 2017, which was the highest level of tax revenues recorded in the region.

But, it also revealed that LAC tax revenues remain far below the Organization for Economic Cooperation and Development (OECD), averaging 34.3 percent in 2018.

“Against this background, the capacity to finance public goods and services and to cushion economic shocks in the region remains limited,” the IDB said.

The Observer noted that the Revenue Statistics in Latin America and the Caribbean 2020 is a joint publication by the IDB, the Inter-American Centre of Tax Administrations (CIAT), the Economic Commission for Latin America and the Caribbean (ECLAC), the Organization for Economic Co-operation and Development (OECD) Centre for Tax Policy and Administration and the OECD Development Centre.

According to that report, 15 countries reported an increase in their tax-to-GDP ratios between 2017 and 2018, while seven recorded a decrease and three remained at the same level.

Three Caribbean countries Trinidad and Tobago up 3.3 percent, Belize up 1.4 percent and Guyana 1.3 percent — recorded the largest increases.

“Looking ahead, in the wake of COVID-19, it will be necessary for LAC economies to strengthen the role of tax systems to stimulate inclusive economic development and, in the longer term, to restore their public finances onto a more sustainable footing,” the publication said.

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