After the Tax Evaders

Almost every Latin American nation agrees that the Alliance for Progress is a brilliant idea and the money welcome, but almost no Latin American nation wants the U.S., as donor, to tell it what to do with the money. Addressing the Inter-American Press Association in Manhattan last week. U.N. Ambassador Adlai Stevenson made it abundantly clear that the U.S. intends to see its money matched by performance and progress. ''Self-help! That is the key to much of our common concern,'' said Stevenson. "If it were lacking, no amount of money in outside aid will do much good."

In no area is reform more sorely needed, Stevenson indicated, than in taxation--"reforming tax systems to relieve the low-and middle-income groups, and ending the tax evasion which costs Latin American governments billions of dollars every year." Latin American nations themselves are hesitantly beginning to recognize the problem. In the first hemisphere meeting of its kind, 66 tax experts from every nation (except Cuba, Haiti, the Dominican Republic) gathered in Buenos Aires last week to study ways of collecting the hidden harvest.

A Sometime Thing. The conference was financed by the Ford Foundation (with a $70,000 grant) and endorsed by the U.S., the Organization of American States, the United Nations Economic Commission for Latin America and the Inter-American Development Bank. For eight days taxmen held seminars, swapped ideas, and agreed that paying taxes in Latin America is a sometime thing.

Despite its productive economy, Mexico is hampered by one of the world's most decrepit tax systems, gets only 33% of its total government revenue from direct taxes v. 50% for Britain, 70.1% for the U.S. In Mexico, income from real property is taxexempt; stockholders are not required to register stock by name, thereby making it easy to evade the comparatively low 15% tax on dividends. Guatemala and Paraguay, both sorely in need of development funds, have no income taxes, although Guatemalan President Miguel Ydigoras Fuentes is trying to push one through Congress. Colombia does not tax capital gains. While the U.S. levies a maximum income tax of 91% on top-bracket citizens, maximum taxes on Latin Americans average 40%.

A Studied Art. Even then, the government gets only a fraction of them. Ducking taxes is an honored institution and a studied art. In some countries, less than half the qualified taxpayers even file a return. Many self-employed professional men keep no records of income; businessmen often keep two sets of books. Brazilian tax experts estimate that Rio de Janeiro's merchants alone cheated the government out of $1.9 million last year. Out in the country, big landholders drive off revenooers at gunpoint, never pay a cruzeiro. According to the taxmen in Buenos Aires last week, if all Latin Americans should start paying taxes scrupulously, their governments would rake in another $3 billion each year.

To make up for income taxes, governments rely heavily on export-import duties, indirect taxes levied on the manufacture of goods and excise taxes slapped on top of that. The result, in many cases, is a hodgepodge of taxes and tariffs that often discourages industry and holds down consumption.

Before heading home, the delegates heard a number of suggestions for reforming their tax systems--and a parting word of warning from the conference director. Economist William Sprague Barnes of Harvard: "Countries that do not improve won't be eligible for further aid under the Alliance for Progress."

This file is automatically generated by a robot program, so reader's discretion is required.