IN order to meet the challenges of development and attain better standards of living, nations have realized the need for domestic resource mobilization. The past two decades have seen Latin American countries raise tax revenues to improve competitiveness and social cohesion. The revenue statistics in Latin America launched by the CIAT, ECLAC AND THE OECD shows that the average tax to GDP ratio in 12 Latin .American and Caribbean countries saw a rise from 14.9% to 19.2% which is an indicator of strong economic growth and better management of tax administrations.

Though there has been significant improvement in the scenario then gap between the Latin American countries and the OECD countries are yet to be bridged. OECD countries have over the years recorded much higher GDP ratio to average tax . It is therefore essential that the Latin American countries now should consider reforms that generate long-term, stable resources for governments to finance development. Tax to GDP ratios for the 12 Latin American and Caribbean countries covered by the Report – Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Mexico, Peru, Uruguay, and Venezuela – vary from Guatemala with the lowest percentage at 12.2% in 2009 to Brazil with the highest percentage at 32.6% (near to the OECD average).