Tax dodging is a huge issue in Latin America and the Caribbean, and it’s costing the region big bucks. According to the Economic Commission for Latin America and the Caribbean (ECLAC), the region loses about $340 billion, or 6.7% of its yearly income due to tax evasion. And despite having one of the lightest tax burdens in the world, tax revenue in the region makes up only 22.8% of GDP compared to the OECD average of 34.3%.

Tax evasion is prevalent due to a combination of regressive tax systems, a high level of informal labor, and low tax enforcement policies. It can also come in many forms, from neglecting to report income from an informal job to money laundering or hiding funds in illegal tax havens; the most recent example of the latter being the Panama Papers Scandal.

To better understand this topic, Dalia asked internet-connected Latin Americans if they find tax evasion acceptable. Across the eight countries included in the survey, very few agreed that tax evasion is “always acceptable”. Mexico had the highest percent with 6% saying tax evasion is always acceptable and Chile had the lowest at 2%. However, there was less accord between countries as to whether tax evasion is sometimes or never acceptable. On average, 30% say it’s sometimes acceptable while the majority (66%) say it’s never okay. In Mexico the split is more drastic with only about half (53%) saying tax dodging is never okay. Brazilians are the most strict with 75% saying avoiding your taxes is never acceptable.

 

There are also stark differences when the responses are grouped by age. On average 41% of millennials (14-29 years old) among the eight countries say tax evasion is sometimes or always acceptable, compared to 28% of 30-49 year olds and 19% of 50-65 year olds. Overall, youth are about twice as likely as the older age group to find tax avoidance acceptable.

 

While it’s hard to pinpoint the cause of this age-based divergence, Dalia will continue to monitor attitudes toward tax evasion and more via our Political Risk Tracker. Get in touch to learn more!

 

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