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By Keith Griffin (eds.)

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Education, health and social 37 DEVELOPMENT FINANCE IN LATIN AMERICA service expenditures account on average for 24 per cent of government expenditure or considerably more than defence expenditures. Not many developed countries could make such a claim. Table 8. 0•4 25•5 25•3 14•4 24•5 14·9 9·6 (%) 17•1 5·9 9•9 10·8 9·8 15•2 a Does not include state governments. , Statistical Yearbook, 1967 (New York, 1968), p. 635. Tax receipts (see Table 9) are notable for three reasons: (1) Expenditures consistently exceed tax revenues.

Such expenditure-revenue gaps are common to developing countries. Consequently inflation becomes one of the major instruments in acquiring resources for the public sector. (2) With the exception of Brazil and Venezuela there is a very heavy reliance on export or import taxes. These large countries lower the average percentage for Latin America as a whole to 16 per cent but there are 8 countries with percentages above 30 per cent. (3) Domestic indirect taxes account for 53 per cent of total taxes while direct taxes account for only 31 per cent.

Table 8. 0•4 25•5 25•3 14•4 24•5 14·9 9·6 (%) 17•1 5·9 9•9 10·8 9·8 15•2 a Does not include state governments. , Statistical Yearbook, 1967 (New York, 1968), p. 635. Tax receipts (see Table 9) are notable for three reasons: (1) Expenditures consistently exceed tax revenues. Such expenditure-revenue gaps are common to developing countries. Consequently inflation becomes one of the major instruments in acquiring resources for the public sector. (2) With the exception of Brazil and Venezuela there is a very heavy reliance on export or import taxes.

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