Renta dignidad: Universalizing old-age pensions

ESS-33 29 with total tax revenue growing from about 15.3 per cent of GDP in 1990 to 28.5 per cent in 2008. 8 Figure 8. Bolivia: Total tax revenue and hydrocarbons tax revenue, as a percentage of GDP 1990-2008 Source: Banco Central de Bolivia, 2009; World Bank, 2010. To a large extent Bolivias new fiscal space is attributable to government revenue from the production and sale of hydrocarbons. State taxes on revenue from hydrocarbons accounted for 5.3 per cent of GDP in 1995, rising to 9 per cent in 2005 and reaching 11.3 per cent of GDP by 2007. Including the revenue from taxes on hydrocarbons, Bolivias overall tax revenue in terms of GDP is now above the average for Latin America. One important factor that should be mentioned is the effort of the Bolivian State to increase the tax burden in other areas than the hydrocarbon sector, and in fact the tax burden, not counting hydrocarbons, has grown steadily for the past 15 years. Between 1995 and 2008 tax revenue not related to hydrocarbons, including social security contributions, increased from 12.2 per cent to 17.9 per cent of GDP figure 9. The behaviour of Bolivias fiscal pressure indicator speaks well of the policies for creating fiscal space undertaken in the country over the past 15 years. Given this process of creating fiscal space, the degree to which the new fiscal space has been allocated to development financing, particularly the promotion of social investment, is critical. 8 This includes social security contributions. 30 ESS-33 Figure 9. Bolivia: Social expenditure as a percentage of GDP and revenue from taxes on hydrocarbons 1995 – 2007 Source: Ministerio de Economía y Finanzas Públicas, 2008; International Monetary Fund, 2010b. The main indicator of the macroeconomic priority attached to social spending, i.e., the ratio to GDP of expenditure on the social sectors, shows that public policy has been clearly focused on social investment. Between 1995 and 2007, the ratio of social expenditure to GDP increased by 4.7 percentage points; this increase was lower than the overall increase of 11 percentage points experienced in total tax revenues. New investment, though significant in relative terms, was still lower than the increase in state revenues generated exclusively by the sales of hydrocarbons – 6 percentage points of GDP over the same period. These indicators reflect a cautious but not restrictive policy vis-à-vis the allocation of fiscal resources compared to the new size of the Bolivian tax burden. It is important to emphasize the major contribution of revenue from hydrocarbons in relation to the volume of social spending; that revenue is currently equivalent to two-thirds of Bolivias total expenditure on the social sector figure 9. The extent to which priority is given to investment in social protection is likewise significant. While the contributory social insurance programmes have not managed to increase their revenue much beyond the historical levels of the last two decades, non- contributory social protection has received a considerable boost, clearly facilitated by the new fiscal space. It should be noted that this situation differs greatly from that of other countries of the region, such as Argentina, Brazil, Chile and Colombia. Unlike Bolivia, these countries have succeeded in mobilizing substantial amounts of revenue through social contributions. Total expenditure on social protection, contributory and non-contributory, rose from 4.6 per cent to 7.6 per cent of GDP over the period 1995-2007. During the same period, expenditure on social protection measured in real terms were multiplied by a factor of 2.5.