This paper reviews the experience of tax reform in Latin America in the 1980s and 1990s, and considers the implications for governance and poverty reduction. The reforms were initiated as part of broader 'Washington Consensus' measures, and involved simplification of tax structures, replacement of trade taxes with revenue from value added tax (VAT), and improved tax administration. Although not fully implemented, the reforms were generally useful. But the focus on technical and administrative measures, which helped the reforms to gain acceptance, came at the expense of neglecting equity and governance dimensions. A series of low key, indigenous reforms have started to address more political aspects of tax reform: they provide a basis for future reforms which might start the process of building a national social contract around public revenue and expenditure issues.
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Brighton, UK: Institute of Development Studies, 2 pp.