Consequently, tax reforms must be evaluated bearing in mind how those resources are used. Reduction in inequality over the past decade has mainly been the result of a better distribution of labour income, with a much lesser redistributive role being played by the State. During the first decade of the twenty-first century, a series of studies were carried out on the impact of fiscal policy on Central American, Andean and other South American countries.1 The results showed that value added tax (vat) had a modest redistributive, although regressive, effect, and that personal income tax was highly progressive, but had a very moderate redistributive effect, particularly when compared to the redistributive capacity of public social spending. It was thus concluded that fiscal policy overall was not playing a strong role in redistribution.