The countries of this region are in a complex scenario regarding tax revenues due to the global event that we are facing, not only because trade and the economy have been slowed by the COVID-19 virus, but also by all the measures that have been adopted at the government level, by which large amounts of money have been injected to keep its population healthy and stable trade, which is a fundamental pillar for any fiscal chest.
The World Bank has recently indicated that as a consequence of Covid-19, many of the Latin American countries will suffer a huge economic contraction that will be close to two digits of gross domestic product, making the situation even more difficult for the region and the world. . This poses enormous challenges for the governments of the region to implement initiatives to resume economic activities. They will require establishing complex fiscal strategies to maintain the attractiveness of investment, reinforce the slumping fiscal funds, put on the table the eternal dilemma of how to obtain those funds, increasing taxes could install a barrier to business initiatives and lowering taxes could obtain the funds at a slower pace.
Mario Cayupan, Partner from Auren Chile