Semester of Graduation

Fall 2018

Department

Agricultural Economics and Agribusiness

Document Type

Thesis

Abstract

Since signing the peace accords in 1996, the Guatemalan government committed to increase the tax burden of 1995 by 50% to a total of 13%. This target has only been reached 4 times in more than two decades. There have been multiple attempts at tax reforms that have failed or been incomplete. Guatemala exhibits much income inequality and is one of the poorest countries in the region.

Given this background, the problem to be considered in this analysis is that there is little information regarding how different tax reforms would affect the accessibility to food in Guatemala. With information regarding taxes collected from Superintendencia de Administracion Tributaria (SAT) a collection target of Q 13,036 million more was set and then five different income tax and VAT scenarios where put in place with the purpose of evaluating how food accessibility was affected in the five income quintiles of the population. To measure food security the cost of the basic food basket (BFB) was used. The BFB is transformed from a family unit to an individual basis. The price of the BFB is then divided by income to measure the accessibility of food for individuals in the different income quintiles. This is then divided by income creating a Food Accessibility Index (FAI) which is the maximum amount of food that the individual in the given quintile can afford.

The results show that new VAT and income taxes hurt the accessibility of food and the lower income individuals are marginally affected more than higher income ones. Held constant the tax structure providing the most food accessibility is based on taxing imported product; the least food accessibility comes from a scenario in which the revenues are attained solely through a domestic sales tax.

Date

8-20-2018

Committee Chair

P. Lynn Kennedy

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