“…Fiscal policy is decomposed into direct taxes (such as income and payroll taxes); direct transfers (such as non-contributory pensions, and conditional and unconditional cash transfers); and indirect taxes and transfers (such as value added taxes, and fuel subsidies). 18 In Costa Rica, direct and indirect transfers and taxes decrease income inequality by three Gini points, from 0.51 to 0.49, a reduction comparable to Brazil, Mexico, and Uruguay, and larger than the reduction in Bolivia and Peru. The evidence available for these six countries suggests that fiscal policy in LAC is not able to counterbalance the inequality pressures from labor income.…”