During the last century and a half Uruguay has been the private estate of the Colorado Party and National Party. But after the victory in the presidential Vázquez 2005, the leftist coalition Frente Amplio took power with a long-awaited redistributive agenda.
One of the first priorities of the new cabinet was to approve a more equitable tax reform . In Uruguay, as is usually For other small countries, equality is a value that scores high in the polls. And it is highly highly correlated with satisfaction with democracy in the region . It is true that levels of poverty and inequality (0.45) in Uruguay are the lowest in Latin America, but the long corporatist tradition of the country, refurbished and open trade and capital liberalization that occurred in the nineties have pointed out quite unfair distribution of tax burden, which rests above all on the shoulders of workers [formal] and the pockets of poor households. Same
tax burden, but a more equitable income distribution
Tabare
The government wanted to increase the vertical and horizontal equity of the tax system, and to this end should reduce the high consumption tax, which mainly affect the poor, and increase the weight and progressive income taxes.
- The income tax was more progressive and increased for the wealthy, especially the 10% richest, which saw an increase of 150% compared with the previous system:
- excise taxes fell for everyone, especially the poorest, since that consume most of their income:
- The tax burden was more just , more efficient, less distortion in the economy, and closer to Europe (with a balanced mix of direct and indirect taxes) . Inequality and poverty after taxes fell slightly, especially when making commodities more affordable to the lowering of VAT, but also the new tax system provides future governments with the tools to increase revenues if they want to expand policies social (or the army, of course). is true that the best combat inequality through spending social taxes that - but you always need to have the money first:
reform equema became clear the winners and losers of : businessmen protested, and the most affected groups were expressed, mainly doctors, lawyers and other highly paid professions, falling in the richest 10%. But again, the prevalent sense of equality was a social value that Uruguay should pursue its resistance-probably mitigated the story would be very different in America, "and this was added to the cost countermeasures against this tax reform: improved overall quality of public services, especially universal health care. Bravo
Tabare.