Causes of Tax Reform in Latin America, 1977-95

By J. Mahon. Latin American Research Review, 2004

123 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/50fa6d3841486c56c8290f44b326fb1f8120f1c3

How researchers see this paper

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In Economics and Econometrics

1. M. Moore
2. N. Eubank
3. T. Fairfield
4. O. Fjeldstad
5. L. Rakner

In Political Science and International Relations

1. N. Eubank
2. M. Moore
3. T. Fairfield
4. O. Fjeldstad

Citations in the corpus

• Going Where the Money Is: Strategies for Taxing Economic Elites in Unequal Democracies (2013, background): “Meanwhile, political scientists have primarily examined value-added tax (VAT) reforms implemented during structural adjustment in the 1980s and 1990s, which posed distinct political challenges (Eaton, 2002; Mahon, 2004).”
• Revenue authorities and public authority in sub-Saharan Africa* (2009, background): “…The first ARAs in those two regions – Ghana in 1985 and Peru in 1991 – were both established in situations of acute fiscal crisis, with government revenues reduced to about 4% of GDP in both cases (Chand & Moene 1999; Joshi & Ayee forthcoming; Mahon 2004; Moore & Schneider 2004; Terpker 1999).”
• Taxation, Political Accountability and Foreign Aid: Lessons from Somaliland (2012, background): “Mahon ( 2004 ) finds evidence of revenue bargaining in Latin America, and Morton ( 1994 : 200–232) explores the relationship between tax structure and accountability in Darfur.”