Together with the CIAT Tax Studies and Research Directorate, we have prepared a database on tax benefits and incentives, which have been identified as tax expenditures and included in the reports of 16 countries of the region. It has been formulated according to the systematic registration of information, allowing for the greatest level of disaggregation in each of the country reports and, sometimes, resorting to additional working papers. The objective behind this work is to compile and render homogeneous all the statistics on tax expenditures, using as reference the experiences compiled and the practices suggested in the Best Practices Manual for Measuring Tax Expenditures (CIAT 2011).

The precise representation of each tax expenditure item allows for aggregating and analyzing the phenomenon from various perspectives, whereby one may determine the total dimension of uncollected resources due to the exceptions in the tax systems, the taxpayers, sectors, regions or the activities receiving the benefits. Through these disaggregation levels, it is possible to examine, in greater detail, one of the components of the cost-benefit equation. Thereafter, the policymaker should evaluate it to determine whether the benefit granted through this mechanism brought about the desired effect. Likewise, whether the latter justifies the associated tax sacrifice.

In current times, with fiscal balances at risk, a significant part of the countries of Latin America (LA) should improve their revenue/expense relationship, to reduce their deficit and endeavoring to mitigate the negative effects on growth. The collection capacity and the level and effectiveness of public expenditure are priority issues that influence the improvement of the fiscal equilibrium. Within this context and focused on what is important for us, it is worth asking ourselves this question. How much can the collection capacity of our countries be improved?  In addition to quantifying, following up and projecting tax collection, it is essential to estimate, quantify and project tax evasion and tax expenditures.

We urge you to read this brief document that comes along with the Tax Expenditures Data Base, which includes the main statistics extracted therefrom, and shows the potential of this new tool, which CIAT hereby makes available to the countries.

Looking forward for your comments.

Best regards.

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