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Clinton Hits Tax Evasion in Latin America

US Secretary Hillary Clinton meeting at the Palacio de Carondelet in Quito with Ecuador's President Rafael Correa, 08 Jun 2010
US Secretary Hillary Clinton meeting at the Palacio de Carondelet in Quito with Ecuador's President Rafael Correa, 08 Jun 2010

U.S. Secretary of State Hillary Clinton continued a four-nation Latin America and Caribbean trip Tuesday, meeting in Quito with Ecuadoran President Rafael Correa. In a speech in Quito, Clinton criticized what she said was widespread tax evasion in Latin America - saying governments are not collecting enough money to provide quality education and services.

Previous suggestions by the Secretary that Latin American states should raise taxes on the wealthy have drawn criticism from American conservatives who see lower taxes in the United States as conducive to growth.

But she emphasized that theme in her policy address in Quito, saying it is a simple fact that in many Latin American countries, the wealthy don't pay their fair share.

"We cannot mince words about this," said Hillary Clinton. "Levels of tax evasion are unacceptably high - as much or more than 50 percent in some of this region's economies when it comes to personal income tax. Now, why does it matter?  It matters because without a sufficient tax base, there are simply not enough revenues for the public sector to offer the services and infrastructure that foster social mobility and competitive economies - roads and power plants, airports,  health systems and schools."

Clinton said that acknowledging tax unfairness and cheating is not class warfare, but a matter of recognizing that a winner takes all approach to economic policy is short-sighted and obsolete.

She said everyone benefits when economic opportunity is broad based:

"More inclusive growth will make our entire economies stronger and more competitive over the long run, which will benefit us all," she said. "We simply cannot support policies that reduce poverty and spread prosperity if the wealthiest among us are not doing our part."

Clinton said that with trade and growth in Latin America relatively high and regional conflicts rare, it is a moment of opportunity for the Americas to consolidate democracy and take off economically.

Clinton had three hours of meetings here with Ecuadoran President Rafael Correa, a left-leaning populist who angered the Bush administration by refusing to extend an accord allowing U.S. drug surveillance flights from Ecuador's Manta airbase.

Mr. Correa has since been critical of the subsequent accord giving U.S. forces access to several Colombian bases. At a joint press event with Mr. Correa, Clinton promised U.S. transparency in its Colombian operations aimed she said at helping that country's battle against drug gangs and FARC guerrillas.

"The United States has been proud to help Colombia," said Clinton. "But clearly we respect the territorial integrity of all countries in the region. And wee are certainly committed to sharing information and working in a mutually-beneficial way with the neighbors of Colombia."

The Ecuadoran president, an ally of Venezuelan President Hugo Chavez welcomed the Clinton assurances while saying regional concerns remain about the bases.

He said he and his government are not anti-American but pro social-justice and said his happiest years those spent at a U.S. university.

He endorsed Clinton's emphasis on tax evasion, saying when he has proposed raising taxes on wealthy Ecuadorans, it is attacked as communist rhetoric.

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