Latin American countries face severe challenges to sustainable development: high levels of social, political or socio-ecologic inequalities, (labor) informality, exclusion and poverty are just the most visible social challenges which ought to be overcome. Most scholars agree that solutions to these challenges won’t be implemented by market forces alone. State action has to promote policies which tackle these issues. In fact, most sustainable development goals named in the UN Agenda 2030 call for increased state action and public spending. However, to afford such public spending, states have to strengthen their fiscal capacity, i.e. their ability to collect revenue via tax or non-tax mechanisms. This makes taxation and public finance in general a vital part of sustainable development.
