Public economics

Finance

Direct tax

Mathematics

Economic growth

Tax revenue

Mathematical analysis

Political science

Latin Americans

Economics

Revenue

Inequality

Development economics

Tax reform

Developing country

Journal of International Development

This paper aims to advance understanding about the relationship between taxation and inequality in developing countries, focusing on the recent experience of Latin America. Tax changes promoted equality since the early 2000s. In particular, the increasing contribution of direct taxes with respect to indirect taxes promoted the progressivity of the tax system and contributed to the reduction of inequality. Yet the effectiveness of taxation in promoting equality in Latin America is still limited by several factors such as the low average tax revenue, the inability to tax top incomes and the low contribution of taxes on property. © 2018 UNU‐WIDER. Journal of International Development published by John Wiley &amp; Sons, Ltd.

Taxation and Inequality in Developing Countries: Lessons from the Recent Experience of Latin America