Paper short abstract:

Cross-national comparison of tax-to-GDP ratios in Argentina, Brazil and Chile shows that post-commodity boom (2010-2016) national performance varies. What factors explain this variation?

Paper long abstract:

Latin America's commodity boom crested round 2010, and the regional terms-of-trade deteriorated thereafter. How commodity price declines might impact the region is a pivotal and potentially a troubling socioeconomic issue. Taxation is a significant area of interest because tax-to-GDP ratios rose fast during the commodity boom (2002-2010) and paid for new social programs (conditional cash transfers, popular sector pensions, etc.) and public employment schemes that expanded the middle class and lowered poverty. More consumer spending resulted, which fueled economic growth. Latin America has been the world's lowest taxed region post-WWII, and the regional tax-to-GDP ratio flattened during the 1990s, so the end of the commodity boom rightly raises concern that public revenue mobilization might revert to its historical, low norm. Did tax-to-GDP ratios decline with commodity prices? Aggregate taxation combines varied taxes (i.e., income, corporate, consumption, trade, etc.), and here country case studies differ. The Value Added Tax (VAT) merits special attention due to its rising importance as a revenue tool across Latin America. Which national tax strategies managed to maintain commodity boom-era tax-to-GDP ratios? This paper tries to answer the above question by comparing Argentina, Chile and Brazil between 2002 and 2014, with special attention to the period 2010-2014 (i.e., post-commodity boom). Counterintuitive given the literature on taxation specific to Latin America, Argentina, historically an especially low tax country outperforms its neighbors after 2010, something the paper tries to explain. The paper will use OECD tax data to make cross-national comparisons.