Political will and changes to the productive structure and tax system are essential for fighting inequality in Latin America and the Caribbean, senior officials from the United Nations and representatives from Governments, academia and civil society coincided during a debate held on Monday, March 2 at the headquarters of the Economic Commission for Latin America and the Caribbean (ECLAC).
María Fernanda Villegas, Chile’s Minister of Social Development; Jorge Coronado Marroquín, representative of the Tax Justice Network for Latin America and the Caribbean; and Ricardo Ffrench-Davis, a professor at the Economics Department of the University of Chile, participated in a roundtable discussion on Challenges for the Fight Against Inequality in Latin America and the Caribbean, at which Winnie Byanyima, Oxfam International’s Executive Director, presented the report Even It Up: Time to End Extreme Inequality.
On ECLAC’s behalf, the roundtable was attended by the Executive Secretary, Alicia Bárcena; the Director of the Economic Development Division, Daniel Titelman; and the Officer-in-Charge of the Social Development Division, Nieves Rico, who moderated the debate.
Alicia Bárcena presented the Equality Trilogy, made up of ECLAC’s last three position documents, which contend that equality is the ethical principle and ultimate goal of development. However, to achieve it, officials must not apply social policies alone but rather promote a structural change that allows for diversifying the economy, developing the industrial sector, raising productivity and increasing investment. Policy is the instrument to achieve this goal, she stressed.
Along those lines, the organization proposes a new equation between the State, the market and society, which can be reflected in social compacts in seven areas, among them matters of taxation. “The State must keep making fiscal policies and public spending more progressive,” the Executive Secretary emphasized. Alicia Bárcena said that reducing inequality will also cut poverty—which affected 167 million people in Latin America in 2014.
In contrast, Oxfam International’s Executive Director highlighted that 25 people in Latin America and the Caribbean owned assets topping 1 billion dollars in 2002, whereas 114 people could claim the same 12 years later. The sum of those 114 fortunes represents 76% of the entire region’s external debt (439 billion dollars). Byanyima called on the region’s countries to “represent the interests of their citizens and not of elite minorities, guaranteeing their rights via quality public policies, financed with sufficient and fairly obtained resources.”
Chile’s Social Development Minister agreed that redistributive tax systems contribute to reducing inequality and she indicated that a new generation of rights-based social policies that strive for universality and the provision of quality public services that prevent social segregation, are also needed.
Jorge Coronado Marroquín—representative of the Tax Justice Network for Latin America and the Caribbean, an association that groups 27 organizations dedicated to fiscal matters—added that Central America had a nominal GDP of around 199 billion dollars in 2013. During that same year, the sub-region’s 965 richest people concentrated 128 billion dollars of wealth, while nearly 60% of the area’s 44 million residents lived in poverty. To set those imbalances right, Coronado stressed the importance of fighting tax evasion and circumvention.
Meanwhile, Ricardo Ffrench-Davis, a former Principal Regional Adviser at ECLAC, said that the region collects taxes in a limited and erroneous way, but added that fiscal reforms will not be enough to reduce inequality if structural change is not tackled as well. “We must resolve to improve the level of productivity of our SMEs and to fight informality in the labor market,” emphasized the University of Chile professor.