Governments throughout Latin America and the Caribbean collected much less in taxes in 2023, largely as a result of their economies slowed down and international costs for oil, gasoline, and minerals fell. That’s the massive takeaway from a new report launched on Could 27 on the UN-ECLAC Regional Fiscal Seminar in Santiago, Chile.
In keeping with the Income Statistics in Latin America and the Caribbean 2025 report, tax revenues within the area averaged 21.3% of GDP in 2023. That’s a small drop from 21.5% the 12 months earlier than and slightly below the pre-pandemic stage of 21.4% in 2019.
What does this imply? Merely put, governments within the area—together with Caribbean nations—are amassing much less cash by taxes in comparison with the scale of their economies. That would make it harder to fund issues like well being care, faculties, and infrastructure.
The report covers 26 international locations. Fourteen of them, together with some Caribbean states, noticed their tax-to-GDP ratios fall in 2023. The sharpest declines have been in Chile and Peru, due principally to a drop in revenue tax collections. This was linked to decrease income in key industries like mining and hydrocarbons, plus a wave of tax refunds and credit issued final 12 months.
Tax-to-GDP ratios various broadly throughout the area. Guyana had the bottom at 11.6%, whereas Brazil had the very best at 32.0%. By comparability, the typical amongst wealthier international locations within the OECD group was 33.9%.
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A better look exhibits that revenue taxes—particularly from international locations wealthy in oil and minerals—fell barely, whereas payroll taxes (like social safety) ticked up a bit. Taxes on items and companies held regular.
Commodity costs performed a serious function within the income dip. Many international locations within the area earn huge cash from oil and mining, however in 2023, these revenues fell. For instance, hydrocarbon revenue dropped from 4.4% to three.9% of GDP, and mining revenue fell from 0.74% to 0.59% of GDP. The report predicts these numbers went even decrease in 2024—down to three.2% and 0.5% of GDP respectively.
For the primary time, the report additionally included non-tax income information—cash governments earn from issues like state-owned corporations, land leases, curiosity, and public service charges. Throughout 22 international locations, these revenues averaged 3.1% of GDP. Cuba stood out with the very best share at 11.6%, whereas Peru had the bottom at 0.4%.
Why does this matter? When tax and non-tax revenues shrink, governments might wrestle to steadiness their budgets. That would imply slicing companies, elevating taxes later, or borrowing extra to make up the distinction.
So despite the fact that the numbers don’t look dramatic at first look, they mirror a much bigger concern: that the area, together with elements of the Caribbean, could also be going through tighter funds within the close to future.
