Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-25T06:24:16.423Z Has data issue: false hasContentIssue false
  • English
  • Français

Causes of Tax Reform in Latin America, 1977–95

Published online by Cambridge University Press:  05 October 2022

James E. Mahon Jr.
James E. Mahon Jr.*
Affiliation:
Williams College
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

Among the policy changes associated with neoliberalism in Latin America, tax reform has played a leading role as it has been crucial not only to price stabilization but also to managing economic liberalization. But it also has a larger significance, since it involved a reconstitution of core state powers, and these could prove useful to any future government that seeks to expand the state's economic role. This paper seeks to determine its causes more precisely by analyzing data from fifteen Latin American countries from 1977 to 1995. Findings show that the definition of “tax reform” has been remarkably similar across the region with less progressivity, fewer exemptions, a new leading role for the value-added tax (VAT), and the strengthening of tax administration. The data analysis then finds reform is predicted by (in roughly descending importance) past inflation, explicit IMF performance conditions, new administrations, more authoritarian-elected governments, the dominance of the president's party in the legislature, established electoral systems, closed-list proportional representation, less polarized party systems, and more numerous parties. Little or no support exists for the causal importance of past changes in gross domestic product (GDP), the constitutional powers of the president, party institutionalization, or partisan balance. The analysis concludes by placing these results in historical context, referring to theories of state formation and the building of institutions in exchange for resources.

Type
Research Article
Information
Latin American Research Review , Volume 39 , Issue 1 , 2004 , pp. 3 - 30
Copyright
Copyright © 2004 by the University of Texas Press

References

ALVAREZ, ANTONIO 1994 “Costa Rica.” Tax Notes International. 11 September.Google Scholar
ASCHER, WILLIAM 1989 “Risk, Politics, and Tax Reform: Lessons from Some Latin American Experiences.” In Tax Reform in Developing Countries, edited by Gillis, Malcolm. Durham, N.C.: Duke University Press.Google Scholar
BARBONE, LUCA, GUPTA, ARINDAM DAS, DEWULF, LUC, AND HARRISON, ANNA 1999 “Reforming Tax Systems: The World Bank Record in the 1990s.” Washington, D.C.: World Bank.CrossRefGoogle Scholar
BATES, ROBERT H. 1989 “A Political Scientist Looks at Tax Reform.” In Tax Reform in Developing Countries, edited by Gillis, Malcolm. Durham, N.C.: Duke University Press.Google Scholar
BATES, ROBERT H., AND LIEN, DA-HSIANG DONALD 1985 “A Note on Taxation, Development, and Representative Government.” Politics and Society 14, no. 1:53–70.CrossRefGoogle Scholar
BECK, NATHANIEL, AND KATZ, JONATHAN N. 1995 “What to Do (and Not to Do) with Time-Series Cross-Section Data.” American Political Science Review 89, no. 3 (September): 634–47.Google Scholar
BELOFF, MAX 1954 The Age of Absolutism, 1660–1815. New York: Harper Torchbooks.Google Scholar
BIRD, RICHARD M. 1988 “Experience from a Century of Change.” In Tax Policy in Twenty-First Century, edited by Stein, Herbert. New York: John Wiley.Google Scholar
BIRD, RICHARD M. 1992 “Tax Reform in Latin America: A Review of Some Recent Experiences.” Latin American Research Review 27, no. 1:7–36.Google Scholar
BIRD, RICHARD M., AND DE JANTSCHER, MILKA CASANEGRA, EDS. 1992 Improving Tax Administration in Developing Countries. Washington, D.C.: International Monetary Fund.Google Scholar
BONNEY, RICHARD 1984 The King's Debts: Finance and Politics in France. Oxford: Clarendon Press.Google Scholar
BOYLAN, DELIA M. 1996 “Taxation and Transition: The Politics of the 1990 Chilean Tax Reform.” Latin American Research Review 31, no. 1:7–32.Google Scholar
BRODERSOHN, MARIO 1988 “Developing Countries' Delicate Balances.” In Tax Policy in the Twenty-First Century, edited by Stein, Herbert. New York: John Wiley.Google Scholar
BUCHANAN, JAMES J. 1967 Public Finance in Democratic Process: Fiscal Institutions and the Individual Choice. Chapel Hill, N.C.: University of North Carolina Press.Google Scholar
CÁMARA DE COMERCIO DE CARACAS 1994 “La cámara de comercio de Caracas ante la reforma tributaria.” Photocopy. May.Google Scholar
CARCIOFI, RICARDO 1990 “La desarticulación del pacto fiscal: una interpretación sobre la evolución del sector público argentino en las dos últimas décadas.” Documento de Trabajo 36 (LC/BUE/L.118). Buenos Aires: U.N. Economic Commission for Latin America and the Caribbean, Buenos Aires office.Google Scholar
CARCIOFI, RICARDO, AND CETRÁNGOLO, OSCAR 1994 “Tax Reforms and Equity in Latin America: A Review of the 1980s and Proposals for the 1990s.” Innocenti Occasional Papers, Economic Policy Series 39. UNICEF International Child Development Center.Google Scholar
CARCIOFI, RICARDO, CETRÁNGOLO, OSCAR, AND BARRIS, GUILLERMO 1993a “Reformas Tributarias en Argentina.” Serie Reformas de Política Pública 7. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
CARCIOFI, RICARDO, CETRÁNGOLO, OSCAR, AND BARRIS, GUILLERMO 1993b “Reformas Tributarias en Bolivia.” Serie Reformas de Política Pública 8. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
CARCIOFI, RICARDO, CETRÁNGOLO, OSCAR, AND BARRIS, GUILLERMO 1993c “Reformas Tributarias en Chile.” Serie Reformas de Política Pública 9. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
CARCIOFI, RICARDO, CETRÁNGOLO, OSCAR, AND BARRIS, GUILLERMO 1993d “Reformas Tributarias en Colombia.” Serie Reformas de Política Pública 10. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
CARCIOFI, RICARDO, CETRÁNGOLO, OSCAR, AND BARRIS, GUILLERMO 1993e “Reformas Tributarias en Costa Rica.” Serie Reformas de Política Pública 11. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
CARCIOFI, RICARDO, CETRÁNGOLO, OSCAR, AND BARRIS, GUILLERMO 1993f “Reformas Tributarias en México.” Serie Reformas de Política Pública 12. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
CASANEGRA DE JANTSCHER, MILKA 1990 “Administering the VAT.” In Value Added Taxation in Developing Countries, edited by Gillis, Malcolm, Shoup, Carl, and Sicat, Gerardo. Washington, D.C.: World Bank.Google Scholar
CENTENO, MIGUEL A. 1997 “Blood and Debt: War and Taxation in Nineteenth-Century Latin America,” American Journal of Sociology 102, no. 6 (May): 1565–1605CrossRefGoogle Scholar
CENTENO, MIGUEL A. 2002 Blood and Debt: War and the Nation-State in Latin America. University Park: Pennsylvania State University Press.Google Scholar
CHEIBUB, JOSÉ ANTONIO 1998 “Political Regimes and the Extractive Capacity of Governments: Taxation in Democracies and Dictatorships.” World Politics 50, no. 3 (April): 349–76.Google Scholar
COOPERS AND LYBRAND, INC. 1982-91 International Tax Summaries. New York: Coopers and Lybrand.Google Scholar
COWAN, KEVIN, BETANCOUR, CRISTINA, AND LARRAÍN, GUILLERMO 1999 “Volatilidad y prociclicalidad de la política fiscal en Latinoamérica: una interpretación.” U.N. Economic Commission for Latin America and the Caribbean, Seminar and Conference Series, no. 3. Santiago, Chile: CEPAL.Google Scholar
DAIN, SULAMIS, AND MENANDRO, PATRICIA FESCH 1993 “Reformas tributarias na América Latina durante os anos 80: o caso do Brasil.” Serie Reformas de Política Pública 13. Santiago, Chile: U.N. Economic Commission for Latin America and the Caribbean.Google Scholar
DURAND, FRANCISCO 1994 “The Politics of Tax Revolutions in Peru, Bolivia, and Argentina.” Paper presented at the XVIII International Congress of the Latin American Studies Association, Atlanta (March 12–14).Google Scholar
ELIZONDO, CARLOS 1994 “In Search of Revenue: Tax Reform in Mexico under the Administrations of Echeverría and Salinas.” Journal of Latin American Studies 26, no. 1 (January): 159–90.CrossRefGoogle Scholar
ELIZONDO, CARLOS 1995 “The Politics of Tax Reform in Latin America.” Documento de Trabajo 32, División de Estudios Políticos, CIDE (Centro de Investigación y Docencia Económicas).Google Scholar
ELIZONDO, CARLOS 2001 Impuestos, democracia, y transparencia. Series: Culture of Accountability, no. 2, Cornisón de Vigilancia, Cámara de Diputados. Mexico City: Auditoría Superior de la Federación.Google Scholar
GEDDES, BARBARA 1994 Politician's Dilemma: Building State Capacity in Latin America. Berkeley: University of California Press.Google Scholar
GIL DÍAZ, FRANCISCO 1987 “Some Lessons from Mexico's Tax Reform.” In The Theory of Taxation in Developing Countries, edited by Newbery, David and Stern, Nicholas. New York: Oxford University Press/World Bank.Google Scholar
GILLIS, MALCOLM, ED. 1989 Tax Reform in Developing Countries. Durham, N.C.: Duke University Press.Google Scholar
GILLIS, MALCOLM, SHOUP, CARL, AND SICAT, GERARDO, EDS. 1990 Value Added Taxation in Developing Countries. Washington, D.C.: World Bank.Google Scholar
GOODE, RICHARD 1990 “Obstacles to Tax Reform in Developing Countries.” In Taxation in Developing Countries, edited by Bird, Richard and Oldman, Oliver. 4th ed. Baltimore: Johns Hopkins University Press.Google Scholar
HAGGARD, STEPHAN, AND KAUFMAN, ROBERT, EDS. 1992 “Introduction: Institutions and Economic Adjustment.” In The Politics of Economic Adjustment, edited by Haggard, Stephan and Kaufman, Robert. Princeton, N.J.: Princeton University Press.Google Scholar
HEREDIA, BLANCA, AND SCHNEIDER, BEN ROSS, EDS. 2002 Reinventing Leviathan: The Politics of Administrative Reform in Developing Countries. Boulder, Colo.: Lynne Rienner.Google Scholar
INTER-AMERICAN DEVELOPMENT BANK 1995 “IDB Supports Fiscal Reform in Latin America and the Caribbean.” Press release, 16 March.Google Scholar
INTER-AMERICAN DEVELOPMENT BANK 1996 Economic and Social Progress in Latin America: 1996 Report. Washington, D.C.: IDB.Google Scholar
INTERNATIONAL MONETARY FUND 1977-95a Government Finance Statistics. Washington, D.C.: IMF.Google Scholar
INTERNATIONAL MONETARY FUND 1977-95b International Financial Statistics. Washington, D.C.: IMF.Google Scholar
INTERNATIONAL MONETARY FUND 1977-95c Documents relating to agreements with fifteen Latin American countries.Google Scholar
KAUFMAN, ROBERT, AND STALLINGS, BARBARA, EDS. 1989 “Debt and Democracy in the 1980s: The Latin American Experience.” In Debt and Democracy in Latin America, edited by Stallings, Barbara and Kaufman, Robert. Boulder, Colo.: Westview.Google Scholar
KEEFER, PHILIP 2001 Database of Political Institutions. Version 3.0 (May). Available at http://www.worldbank.org/research/bios/pkeefer.htmGoogle Scholar
KISER, EDGAR, AND HECHTER, MICHAEL 1991 “The Role of General Theory in Comparative-Historical Sociology.” American Journal of Sociology 97, no. 1 (July): 1–30.Google Scholar
LEVI, MARGARET 1988 Of Rule and Revenue. Berkeley: University of California Press.Google Scholar
LÓPEZ, MARÍA ISABEL 1994 “Reforma Tributaria: un Factor Clave Dentro del Programa Económico de Nuevo Gobierno.” Informe mensual metroeconómica. Caracas. March.Google Scholar
LUCIANI, GIACOMO 1994 “The Oil Rent, the Fiscal Crisis of the State and Democratization.” In Democracy Without Democrats?, edited by Salamé, Ghassan. London: I.B. Tauris.Google Scholar
MAHON, JAMES E. JR. 1995 “Tax Reform and the State: Venezuela in Regional Context.” Paper prepared for delivery at the meeting of XIX International Congress of the Latin American Studies Association, Washington, D.C. September 28–30.Google Scholar
MAINWARING, SCOTT, AND SCULLY, TIMOTHY, EDS. 1995 Building Democratic Institutions: Party Systems in Latin America. Stanford, Calif.: Stanford University Press.Google Scholar
MANN, ARTHUR 1989 “Economía Política de la Reforma Tributaria en Bolivia.” Desarrollo Económico 29, no. 115 (October-December): 375–97.Google Scholar
MARSHALL, MONTY G., AND JAGGERS, KEITH 2000 Polity IV Project: Political Regime Characteristics and Transitions. Available at http://www.bsos.umd.edu/cidcm/polityGoogle Scholar
MCLURE, CHARLES E. JR. 1989 “U.S. Tax Laws and Capital Flight from Latin America.” Inter American Law Review 20, no. 2:321–56.Google Scholar
MORLEY, SAMUEL A., MACHADO, ROBERTO, AND PETTINATO, STEFANO 1999 “Indexes of Structural Reform in Latin America,” Serie Reformas Económicas 12, ECLAC. Santiago: UN-ECLAC.Google Scholar
MUSGRAVE, RICHARD 1987 “Tax Reform in Developing Countries.” In The Theory of Taxation in Developing Countries, edited by Newbery, David and Stern, Nicholas. New York: Oxford University Press/World Bank.Google Scholar
NELSON, JOAN M., ED. 1990 Economic Crisis and Policy Choice: The Politics of Adjustment in the Third World. Princeton, N.J.: Princeton University Press.CrossRefGoogle Scholar
POGGI, GIANFRANCO 1978 The Development of the Modern State. Stanford, Calif.: Stanford University Press.CrossRefGoogle Scholar
RODRIGUEZ, FLAVIA 1993 “Tax Reforms in Latin America 1978–1992: A Comparative Analysis.” Social and Economic Studies 42, no. 4 (4): 1–23.Google Scholar
SCHIERA, PIERANGELO 1965 “L'introduzione delle ‘Akzise’ in Prussia e i suoi Riflessi nella Dottrina Contemporanea.” Annali della Fondazione Italiana per la Storia Amministrativa 2.Google Scholar
SHAH, ANWAR, AND WHALLEY, JOHN 1991 “Tax Incidence Analysis of Developing Countries: An Alternative View.” The World Bank Economic Review 5, no. 3:535–52.Google Scholar
SHOME, PARTHASARATHI 1992 “Trends and Future Directions in Tax Policy Reform: A Latin American Perspective.” Bulletin for International Fiscal Documentation 46, no. 9 (September): 452–66.Google Scholar
SHOME, PARTHASARATHI 1995 “Tax Reform in Latin America.” Finance and Development 32, no. 1 (March): 14–16.Google Scholar
SHUGART, MATTHEW S., AND MAINWARING, SCOTT 1997 “Presidentialism and Democracy in Latin America: Rethinking the Terms of the Debate.” In Presidentialism and Democracy in Latin America, edited by Mainwaring, Scott and Shugart, Matthew S. Cambridge: Cambridge University Press.Google Scholar
STALLINGS, BARBARA 1992 “International Influence on Economic Policy: Debt, Stabilization, and Structural Reform.” In The Politics of Economic Adjustment, edited by Haggard, Stephan and Kaufman, Robert R., 41–88. Princeton: Princeton University Press.Google Scholar
STEIN, ERNESTO, TALVI, ERNESTO, AND GRISANTI, ALEJANDRO 1999 “Institutional Arrangements and Fiscal Performance: The Latin American Experience.” In Fiscal Institutions and Fiscal Performance, edited by Poterba, James and Hagen, Jürgen von. Chicago: University of Chicago Press.Google Scholar
THIRSK, WAYNE, ED. 1997 Tax Reform in Developing Countries. World Bank Sectoral and Regional Studies. Washington, D.C.: World Bank.Google Scholar
TILLY, CHARLES, ED. 1975 The Formation of National States in Western Europe. Princeton, N.J.: Princeton University Press.Google Scholar
TILLY, CHARLES, ED. 1985 “War Making and State Making as Organized Crime.” In Bringing the State Back In, edited by Evans, Peter, Rueschemeyer, Dietrich, and Skocpol, Theda. New York: Cambridge University Press.Google Scholar
UNITED NATIONS, ECONOMIC COMMISSION FOR LATIN AMERICA AND CARIBBEAN, THE 1998 The Fiscal Covenant: Strengths, Weaknesses, Challenges. Santiago, Chile: UNECLAC.Google Scholar
WEYLAND, KURT 1996 Democracy without Equity: Failures of Reform in Brazil. Pittsburgh: University of Pittsburgh Press.Google Scholar
WEYLAND, KURT 1998 “The Political Fate of Market Reform in Latin America, Africa, and Eastern Europe.” International Studies Quarterly 42, no. 4 (December): 645–73.Google Scholar
WILLIAMSON, JOHN, AND HAGGARD, STEPHAN 1994 “The Political Conditions for Economic Reform.” In The Political Economy of Policy Reform, edited by Williamson, John. Washington, D.C.: Institute for International Economics.Google Scholar
WORLD BANK 1987 Annual Report. Washington, D.C.: World Bank.Google Scholar
WORLD BANK 1992 Annual Report. Washington, D.C.: World Bank.Google Scholar
WORLD BANK 1993 Annual Report. Washington, D.C.: World Bank.Google Scholar