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Amaria F. Valdés, Coordinator of Tax Issues LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, March 4, 2021 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will Latin America Brazil Reports Chief Corporate Affairs Officer, Grubhub Second Straight Joyce Chang Global Head of Research, Levy New Taxes to Day of Record JPMorgan Chase & Co. Covid Deaths Paula Cifuentes Director of Economic & Fiscal Affairs, Cover Covid Costs? Brazil’s Health Ministry reported Latin America & Canada, 1,910 Covid-19 deaths, a record Philip Morris International total for the second consecutive Marlene Fernández day. Corporate Vice President for Page 2 Government Relations, Arcos Dorados (McDonald’s) Peter Hakim BUSINESS President Emeritus, Inter-American Dialogue Casino Sued Over Donna Hrinak Senior VP, Corporate Affairs, Beef Linked to Royal Caribbean Group Deforestation Jon E. Huenemann Council Member, Indigenous groups from Brazil and GLG Inc. Colombia filed suit against French James R. Jones retailer Casino over its sales of Chairman, Several countries in the region are debating tax reforms amid the economic downturns brought beef linked to deforestation in the Monarch Global Strategies by the Covid-19 pandemic. // File Photo: Argentine Government. Amazon. Craig A. Kelly Page 2 Senior Director, Americas Int’l Gov’t Relations, Exxon Mobil Economic downturns and gaps between the rich and the poor John Maisto that have been worsened by the Covid-19 pandemic have led POLITICAL Director, U.S. Education Finance Group to debate on tax reform proposals. In Latin America, coun- Press Groups Nicolás Mariscal Q tries including Argentina, Bolivia, Chile and Peru have either Demand Ortega Chairman, Grupo Marhnos implemented or are considering so-called “Robin Hood” taxes, or levies Stop Harassing Thomas F. McLarty III that are raised on high-net-worth individuals. Meanwhile, international Journalists Chairman, advocacy group Oxfam has called for a tax on corporations’ “excess McLarty Associates Press groups demanded that Beatrice Rangel profits” during the coronavirus pandemic, a notion that has caught Nicaraguan President Daniel Director, the attention of policymakers in the region, according to a BBC News Ortega stop harassing journal- AMLA Consulting LLC report. How would such tax hikes affect Latin American countries, and ists. The government has seized Jaana Remes media properties and passed laws Partner, do proponents have the right plans for the revenue’s use? How well have McKinsey Global Institute targeted at people it accuses of Ernesto Revilla wealth taxes worked in the past in Latin America? What is the outlook spreading alarming information. Head of Latin American for corporate tax changes in the region this year, and to what degree will Page 2 Economics, Citi they be temporary or more permanent? Gustavo Roosen Chairman of the Board, Envases Venezolanos Andrés Rozental Maria F. Valdés, coordinator of tax issues at Fried- President, Rozental & rich-Ebert-Stiftung in Colombia: “Latin America will face a Asociados new lost decade due to the Covid emergency. In the midst Shelly Shetty Managing Director, Sovereigns of this situation, all efforts should be made to secure a Fitch Ratings A sustainable recovery that may imply an expansive policy and thus a reduction—not a hike—in taxes. However, most Latin American countries’ debts are reaching unsustainable paths, and a wealth tax or an excess profits tax looks like a good alternative that allows countries to increase tax revenue without compromising low- and middle-class consumption, Ortega // File Photo: Nicaraguan which is necessary for a fast and fair recovery. Many countries are indeed Government. Continued on page 2 COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Thursday, March 4, 2021 POLITICAL NEWS to curb the spread of the novel coronavirus. NEWS BRIEFS Brasília tightened restrictions last weekend, Brazil Reports and Rio de Janeiro’s mayor is expected to take Press Groups Demand similar action soon, O Globo reported. Brazilian Nicaragua’s Ortega Stop Second Consecutive President Jair Bolsonaro, who has downplayed the threat of the virus and is rarely seen wear- Harassing Journalists Day of Record Deaths ing a face mask in public, a basic containment Four press freedom groups, including the measure urged by health authorities around the Committee to Protect Journalists, called Brazil for the second consecutive day on world, criticized the lockdowns on Wednesday. Wednesday on Nicaraguan President Daniel Wednesday reported a record number of “You cannot panic, like resorting once again to Ortega to stop harassing journalists, the deaths from Covid-19 as a more contagious this stay-at-home policy. People are going to Associated Press reported. “News outlets have variant of the novel coronavirus spreads, die of hunger and depression,” he told a group been forced to close and individual journalists Bloomberg News reported. The Health Ministry of supporters, Agence France-Presse report- threatened, harassed, sued, surveilled and reported 1,910 new deaths over the previous ed. A slow vaccine rollout and gatherings for jailed, as dozens more fled the country for their 24 hours, pushing the country’s total number Carnival have added to the spike in infections, own safety,” the CPJ said. Ortega’s government of Covid-19 deaths to 259,271. The number of Bloomberg News reported. Brazil has deployed has seized media properties and passed laws confirmed Covid-19 cases also rose by 71,704 vaccines from China’s Sinovac and Britain’s requiring prison time for people who spread in the previous 24 hours, to 10,718,630. Also AstraZeneca. The government also signed a information online that the government consid- on Wednesday, São Paulo Gov. João Doria deal for 100 million doses of Pfizer’s vaccine, ers alarming. announced the mandatory closure for two Veja reported. weeks of all nonessential businesses, including stores and gyms. The restrictions take effect Saturday and come as more than 75 percent of ECONOMIC NEWS El Salvador Discussing the state’s beds in hospital intensive care units $1.3 Billion Funding were occupied. “We are about to collapse in Package With IMF São Paulo and in Brazil,” Doria told reporters. Brazil’s GDP Shrinks El Salvador is in talks with the International Patients’ hospital stays are also getting longer, 4.1 Percent, Sharpest Monetary Fund for some $1.3 billion in funding, said João Gabbardo, the executive coordinator Finance Minister Alejandro Zelaya told Reuters of São Paulo state’s Covid-19 contingency Drop in Decades in an interview, the wire service reported today. center. Other Brazilian states, including Rio Zelaya said this moment was a “golden oppor- Grande do Sul and Pernambuco, have already Brazil’s economy contracted 4.1 percent last tunity” to revive the economy, following the tightened restrictions on movement in efforts year, its sharpest contraction since 1990, ruling party’s overwhelming win in legislative elections last Sunday. El Salvador is seeking a FEATURED Q&A / Continued from page 1 36-month extended fund facility. proposing wealth taxes, most of them es in corporate income taxes being heavily seeking to tie the revenue to social programs discussed in the region. We could expect the to fight the social effects of the pandemic, tax rate to either stay the same or decrease, Paraguay Cancels through initiatives such as basic income as has happened in recent decades.” Nonemergency Surgeries schemes. Some countries in the region have long and positive experiences with taxes of Reuven Avi-Yonah, Irwin I. Cohn in Public Hospitals this kind. Colombia, for instance, had its first Professor of Law and director Paraguay has canceled nonemergency sur- wealth tax in 1923, and it has existed almost of the International Tax LLM geries in all public hospitals amid a surge of uninterrupted until today, with a revenue A Program at the University of Covid-19 infections that is overwhelming inten- of more than 1 percent of GDP in its best Michigan: “I think we need to distinguish sive care units, the Health Ministry announced years. The Colombian experience shows between higher taxes on individual rich Wednesday, the Associated Press reported. that permanent wealth taxes are no more people and higher taxes on corporations, in- Resources from canceled surgeries will go avoidable than other taxes and collect fairly cluding an excess profits tax like the Oxfam toward fighting the pandemic, the ministry well. In terms of corporate income taxes, I proposal. Higher taxes on individual rich added. A pneumologist at the National Institute do not see the excess profits tax or increas- people can probably be enforced, although of Respiratory and Environmental Diseases Continued on page 4 told the AP that the country was running out of medical supplies. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, March 4, 2021 the country’s statistics institute announced Wednesday, Reuters reported. Despite the THE DIALOGUE CONTINUES sharp drop, the contraction was not as severe as analysts had earlier expected. At the begin- ning of the Covid-19 pandemic nearly a year Who Has the Edge Ahead ago, the World Bank had expected that Latin America’s largest economy would contract 8 of Peru’s Presidential Vote? percent, and the International Monetary Fund Support for Peruvian presiden- Keiko Fujimori, a former congresswoman expected a contraction of 9.1 percent. Stimulus tial candidate George Forsyth and daughter of former President Alberto Fu- programs helped to cushion the impact of the dropped nearly six percentage jimori; and Rafael López Aliaga, a conserva- pandemic, analysts said. “We had a big fall (in Q points over the past month amid tive businessman and admirer of Trump and activity) last year, but with the emergency aid, it controversy regarding the validity of his Bolsonaro. The scenario could become even was much smaller than originally predicted. It candidacy, and candidate Yonhy Lescano more complicated if the National Jury of could have been much worse ..
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