Latin America establishes platform for tax policy and wealth distribution discussion

On July 27 and 28, the first summit on "Inclusive, sustainable and equitable global taxation" was held in the Colombian city of Cartagena, organized by the governments of Colombia, Brazil and Chile and hosted by the Economic Commission for Latin America and the Caribbean (ECLAC).

The event brought together senior officials from the Ministries of Economy of 15 countries in Latin America and the Caribbean. The objective of the space is to address the issue of tax collection and fairer distribution of wealth, seeking a paradigm of greater transparency and cooperation in tax matters among the countries of the region.

Parallel to the governmental space of the summit, dozens of Latin American civil society organizations and trade unions organized a series of training events and the elaboration of political demands to be published and sent to governments within the framework of the summit.

"That tax summit is a demand of the Latin American trade union movement in recent years, for understanding that governments in the region need to establish common coordinated positions within international tax discussions," says Gabriel Casnati, tax justice coordinator at Public Services International (PSI). "Moreover, in the face of tax abuse the only way to increase and improve tax collection and public investment is through regional cooperation, transparency and policy coordination. This is the only way to combat tax havens, promote progressivity and thus reduce the tremendous inequality in the region," said Casnati.

Delegación de la ISP en la Cumbre de Cartagena
Delegación de la ISP en la Cumbre de Cartagena

Latin America and the Caribbean is considered the most unequal region in the world, with the richest 10% holding 77% of total household wealth and the poorest 50% not even owning 1%. Regressive taxation plays a central role in this inequality, considering a regional scenario where the poor pay proportionally more taxes than the wealthy and multinationals, weakening the capacity of the States to offer quality public services.

Progress, but timid

The evaluation of the two days of the Summit left a mixed feeling on the part of the trade union movement and the civil society organizations that accompanied the process. On the one hand, the establishment of a permanent structure of a regional fiscal platform, with an annual pro tempore presidency, assumed by Colombia, a technical secretariat coordinated by the Economic Commission for Latin America and the Caribbean (ECLAC) and working groups where the participation of civil society is foreseen, is welcomed.

On the other hand, the absence of key countries and regions tarnishes the take-off of the new Latin American and Caribbean fiscal platform. Countries such as Argentina, Uruguay, Venezuela, Costa Rica, Guatemala were absent, as well as all the nations of the English-speaking Caribbean. In the same vein, the low profile of most of the ministerial representatives present, where the only Finance Minister who participated was Ricardo Bonilla, from Colombia, stands out negatively. It is also worth noting the striking gender disparity among the national representatives, with only one woman among their countries' spokespersons.

Among the formal developments held in Cartagena was the declaration of principles presented and signed by most of the countries. We are still concerned about the lack of political content in the declaration, with no explicit mention of issues such as tax evasion and unjustified tax benefits.

The region also decided on the issues they consider to be priorities in global tax discussions: environmental taxation, progressivity of the tax system, tax benefits, digital taxation and new forms of work. But little or nothing was said about these issues, at a time when countries such as Mexico and Haiti have proven to be reticent about these priorities.

The way forward

Although it has not lived up to expectations, this is an old struggle of PSI, the trade union movement and the Latin American tax justice movements. We have a great opportunity ahead of us and we will continue to accompany and influence this process, seeking: i. The consolidation of the tax platform as a permanent body with direct participation of the trade union movement; ii. Expansion of the platform to the countries (especially Central American and Caribbean countries) that were absent at the first meeting; iii. Incorporation of trade union demands for tax justice in Latin America.

In view of the Cartagena process, PSI and TUCA published a document with their demands:

  1. That they publicly recognize that their objective is to work together to achieve well-designed fiscal reforms that lead to greater public revenue collection in a more progressive manner.

  2. That they turn that first Summit into a permanent platform for high-level fiscal cooperation among Latin American and Caribbean countries. "Ministers should meet at least once a year from now on and there must be regular and significative consultations from the outset with the trade union movement and civil society."

They also called that necessary mechanisms should be put in place for regional talks on reforms desirable for workers and that these should include the following issues:

  • Higher taxes on big business and the wealthy and more eficient fiscal collection.

  • Alternative development models that focus on innovation and domestic resource mobilization, especially in low-tax Caribbean countries.

  • Greater transparency, an asset register and automatic exchange of fiscal information within the region.

  • A fairer and more eficient fiscal of digital benefits.

  • Link fiscal reform to greater transparency in the use of public budgets, ensuring greater financing of public services and sustainable investments in line with economic, social, environmental and cultural rights.

  • A greater role for the region in the development of international fiscal standards.

PSI was also part of the construction of the declaration prepared by 10 civil society organizations that followed the Cartagena meetings, summarized in 10 points (and available below):

Recommendations for tax reforms in the region

  1. Incorporate compliance with human rights and environmental obligations as general principles to guide and inform tax decision-making.

  2. Promote progressivity and equity in the region's tax systems.

  3. Promote corporate tax reforms, especially for multinational companies, that consider and protect the interests of the region.

  4. Take measures aimed at increasing fiscal transparency.

  5. Promote taxes that seek to protect the environment, especially in relation to the energy transition and the response to the climate crisis.

  6. Review tax benefits with criteria of transparency and equity, eliminating privileges and prioritizing benefits that generate inclusive growth, sustainable development and social justice.

  7. Promote truly inclusive global tax governance that respects national sovereignty.

  8. Incorporate a gender focus in tax policy.

  9. Decolonize standards on taxation and international transparency.

  10. Ensure genuine civil society participation in the new platform.