Peru is the fourth most unequal country in the world

Peru is the fourth most unequal country in the world, It is followed by Mexico and the Dominican Republic, and it is that 1% of the population of each country concentrates between 25% and 30% of total income, according to the Latinometrics analysis based on the Report on global inequality 2022.

The richest 10% of the world population receives 52% of the income, while the poorest half of the population earns 8.5%. On average, a person in the top 10% of the world income distribution earns US$122,100 per year; meanwhile, a person from the poorest half earns US$3,920 per year. In the case of Peru, income is US$7,723 a year on average, according to the report.

“Brazil and Chile also rank painfully high, with around 22% of each country’s wealth held by the wealthiest citizens. This puts these two major economies somewhere between Russia and a number of (Persian) Gulf states that are run by royal families or embroiled in civil war,” says Gabriel Cohen of Latinometrics.

In the Peruvian case, the professor of the Department of Economics of the PUCP, Jonathan Clausen, explains that behind the dynamics of inequality there are some hypotheses: people with lower incomes are more exposed to losing their jobs, having to sell their few assets they have, with less ability to cope with shocks that put them in a position of vulnerability, such as the pandemic.

“While the people who belong to the top of the distribution pyramid they have a greater capacity to deal with these shocks,” he says.

On a global scale, over the past 40 years, countries have gotten richer, but their governments have gotten poorer, the report says. Could this have an impact on bridging the gap?

“In Peruwhat we have It is a State that does not have the capacity to guarantee a minimum of well-being for all Peruvians, we are a long way from those rich countries that are shortening the state,” Clausen said.

For the also researcher, what is needed is to increase and improve the presence of the State in the territories, aspects that must go hand in hand.

tax the rich

The International Monetary Fund (IMF) affirmed that the rich in Latin America should pay more taxes, but specified that higher taxes are not necessarily higher, but that there must be better ways to curb tax evasion and legal loopholes.

In this regard, the economist Armando Mendoza points out that before creating new taxes, there must be a tax system that works to prevent evasion and avoidance. On the other hand, there is a legal mechanism to evade taxes that is through tax exemptions, and it is not that these are negative, but that they are currently used to benefit large companies, for example.

In this scenario, can the tax system be strengthened? “Not at these moments. A consensus is required between the different political sectors for it to be sustainable. At this moment, we cannot even reach an agreement regarding the early elections”, which is why the next government will be tasked, concluded the economist.

What is the most unequal region?

The inequality it varies significantly between the most equal (Europe) and the most unequal (Middle East and North Africa, i.e. MENA) region, according to the Global Inequality Report 2022.

In Europe, the top 10% earners are around 36%, while in MENA it reaches 58%.

Between these two levels, there is a diversity of patterns. In East Asia, the richest 10% account for 43% of total income and in Latin America, 55%.

Income is measured after pension and unemployment contributions and benefits paid and received.

Data

Losses. Peru is one of the countries with the highest rate of tax evasion in the region. 50% of the income tax (IR) and 30% of the General Sales Tax (IGV) are lost due to evasion and avoidance, which in total represents 8% of the GDP that is lost each year, according to Mendoza.