moderately over the last two decades. Social security contributions
have decreased slightly from 16.6% to 14.8% with a minor
increase in the first half of the 1990s. It is noteworthy,
however, that there are considerable differences in the composition
of these revenue sources across countries in the region.
For example, in Bolivia VAT accounts for 46.2% of total
tax revenues in 2008, while in Panama it amounts to only
13.8%. For year-over-year growth rates for the major tax
sources see Appendix C.
Going further into detail, we differentiate (i) personal income
tax (PIT) from corporate income tax (CIT) and (ii) external
VAT from domestic VAT. Figures 3 and 4 show the sample variation
of PIT and CIT as well as the one of the two VAT components
for the Peruvian economy during the financial crisis.
Obviously, PIT revenue growth slowed gradually until the revenue
fell slightly in the second quarter of 2009 and only recovered
slowly afterward. Ups and downs of CIT revenues are
more pronounced and somewhat lag the cycle. In fact, CIT
revenue growth actually accelerated at the end of 2008 before
falling in 2009. Possible explanations for the differences include