Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-25T21:04:10.577Z Has data issue: false hasContentIssue false
  • English
  • Français

Human development without democratic accountability: how regressive taxation contributes to human development through state capacity

Published online by Cambridge University Press:  29 August 2018

Junko Kato  and
Seiki Tanaka
Junko Kato
Affiliation:
Graduate School of Law and Politics, The University of Tokyo
Seiki Tanaka*
Affiliation:
Department of Political Science, University of Amsterdam & School of Politics and International Studies, University of Leeds
*
*Corresponding author: Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

State revenue production since the third wave of democratization contrasts sharply with the experiences of the first and second waves of democratization. The late democratizers tend to adopt and raise revenue from a regressive tax on consumption (the value-added tax: VAT), which is more compatible with economic development in global markets but is considered as unequal taxation. How does the weak redistributive (i.e., regressive) effect of this form of taxation affect the welfare of people? We build on the conventional wisdom that democratic accountability through multiparty contestation improves human development. Focused on taxation, we argue that an increasing state financial capacity contributes to an increase in human development, even when electoral contestation is absent. Empirical analyses employed a reduction in infant mortality as an indicator for the improvement of human development and demonstrate the counter-intuitive effect of the VAT on human development. Despite the effect of weak redistribution, the VAT contributes to human development in countries with less democratic accountability. The results also show that the state's financial capacity to secure tax compliance, rather than a mere increase in tax revenue, intervenes critically in such development in countries since the third wave. We conclude that the increased state financial capacity with regressive taxation is expected to promote human development in newly emerging democratic states.

Type
Taxation and Welfare Since the Third Wave of Democratization
Information
Japanese Journal of Political Science , Volume 19 , Issue 3 , September 2018 , pp. 429 - 443
Copyright
Copyright © Cambridge University Press 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aizenman, J and Jinjarak, Y (2009) Globalisation and developing countries – a shrinking tax base? Journal of Development Studies 45, 653–671.Google Scholar
Bahl, RW and Bird, RM (2008) Tax policy in developing countries: looking back and forward. National Tax Journal 61, 279–301.Google Scholar
Barreix, A, Garcimartin, C and Velayos, F (2013) Personal income tax: an empty shell. In Corbacho, A, Cibils, VF and Eduardo, L (eds), More Than Revenue: Taxation as A Development Tool. New York, NY: Palgrave Macmillan. pp. 115–134Google Scholar
Baskaran, T (2014) Taxation and democratization. World Development 56, 287–301.Google Scholar
Baskaran, T and Bigsten, A (2013) Fiscal capacity and the quality of government in Sub-Saharan Africa. World Development 45, 92–107.Google Scholar
Beck, N and Katz, JN (2011) Modeling dynamics in time-series–cross-section political economy data. Annual Review of Political Science 14, 331–352.Google Scholar
Besley, T and Persson, T (2009) The origins of state capacity: property rights, taxation, and politics. American Economic Review 99, 1218–1244.Google Scholar
Bird, RM and Gendron, P-P (2006) “Is VAT the best way to impose a general consumption tax in developing countries?”. Andrew Young School of Policy Studies, Georgia State University, International Studies Program Working Paper 06-17.Google Scholar
Bird, RM and Gendron, P-P (2007) The VAT in Developing and Transitional Countries. New York: Cambridge University Press.Google Scholar
Bräutigam, D (2008) Introduction: taxation and state-building in developing countries. In Bräutigam, D, Fjeldstad, O-H and Moore, M (eds), Taxation and State-Building in Developing Countries: Capacity and Consent. Cambridge: Cambridge University Press, pp. 1–33.Google Scholar
Bräutigam, D, Fjeldstad, O-H and Moore, M (2008) Taxation and State-Building in Developing Countries: Capacity and Consent. Cambridge: Cambridge University Press.Google Scholar
Buehn, A and Schneider, F (2012) Shadow economies around the world: novel insights, accepted knowledge, and new estimates. International Tax and Public Finance 19, 139–171.Google Scholar
Cnossen, S (2015) Mobilizing VAT revenues in African countries. International Tax and Public Finance 22, 1077–1108.Google Scholar
Coppedge, M, Gerring, J, Lindberg, SI, Skaaning, S-E, Teorell, J, Altman, D, Andersson, F, Bernhard, M, Fish, MS, Glynn, A, Knutsen, CH, McMann, K, Mechkova, V, Miri, F, Paxton, P, Pemstein, D, Sigman, R, Staton, J and Zimmerman, B (2016) V-Dem codebook v6. Varieties of Democracy (V-Dem) Project.Google Scholar
Corbacho, A, Cibils, VF and Lora, E (eds) (2013) More Than Revenue: Taxation as A Development Tool. New York, NY: Palgrave Macmillan, pp. 1–255.Google Scholar
Dahl, RA (1989) Democracy and its Critics. New Haven: Yale University Press.Google Scholar
Dietrich, S and Michael, B (2016) State or regime? The impact of institutions on welfare outcomes. European Journal of Development and Research 28, 252–269.Google Scholar
Ebrill, LP, Keen, M, Bodin, J-P and Summers, V (2001) The Modern VAT. Washington DC: International Monetary Fund.Google Scholar
Gemmell, N and Morrissey, O (2005) Distribution and poverty impacts of tax structure reform in developing countries: how little we know. Development Policy Review 23, 131–144.Google Scholar
Genschel, P and Seelkopf, L (2016) Did they learn to tax? Taxation trends outside the OECD. Review of International Political Economy 23, 316–344.Google Scholar
Gerring, J, Thacker, SC and Alfaro, R (2012) Democracy and human development. Journal of Politics 74, 1–17.Google Scholar
Gerring, J, Knutsen, CH, Skaaning, S-E, Teorell, J, Coppedge, M, Lindberg, SI and Maguire, M (2016) Electoral Democracy and Human Development. Gothenburg: University of Gothenburg, Varieties of Democracy Institute, V-Dem Working Papers.Google Scholar
Gillis, M (1989) Tax Reform in Developing Countries. Durham: Duke University Press.Google Scholar
Gordon, RH (2010 a) Introduction: overview of tax policy in developing countries. In Gordon, RH (ed.) Taxation in Developing Countries: Six Case Studies and Policy Implications. New York: Columbia University Press, pp. 1–10.Google Scholar
Gordon, RH (2010 b) Taxation in Developing Countries: Six Case Studies and Policy Implications. New York: Columbia University Press, pp. 1–352.Google Scholar
Haber, S (2006) Authoritarian government. In Weingast, B and Wittmans, D (eds), The Oxford Handbook of Political Economy. New York: Oxford University Press, pp. 693–707.Google Scholar
Hanson, JK (2015) Democracy and state capacity: complements or substitutes? Studies in Comparative International Development 50, 304–330.Google Scholar
Huber, E, Mustillo, T and Stephens, JD (2008) Politics and social spending in Latin America. The Journal of Politics 70, 420–436.Google Scholar
Imai, K, Keele, L and Tingley, D (2010) A general approach to causal mediation analysis. Psychological Methods 15, 309–334.Google Scholar
Imai, K, Keele, L, Tingley, D and Yamamoto, T (2011) Unpacking the black box of causality: learning about causal mechanisms from experimental and observational studies. The American Political Science Review 105, 765–789.Google Scholar
Kato, J (2003) Regressive taxation and the welfare state: Path dependence and policy diffusion. Cambridge: Cambridge University Press.Google Scholar
Kato, J and Tanaka, S (2018) Does taxation lose its role in contemporary democratisation? State revenue production revisited in the third wave of democratisation. European Journal of Political Research. doi: 10.1111/1475-6765.12276.Google Scholar
Kato, J and Toyofuku, M (2018) The divergent paths of tax development during different waves of democratization. Japanese Journal of Political Science (this issue).Google Scholar
Keen, M and Lockwood, B (2010) The value added tax: its causes and consequences. Journal of Development Economics 92, 138–151.Google Scholar
Mann, M (1984) The autonomous power of the state: its origins, mechanisms and results. European Journal of Sociology 25, 185–213.Google Scholar
Mares, I and Carnes, ME (2009) Social policy in developing countries. Annual Review of Political Science 12, 93–113.Google Scholar
McGuire, JW (2010) Wealth, Health, and Democracy in East Asia and Latin America. New York: Cambridge University Press.Google Scholar
Miller, MK (2015) Electoral authoritarianism and human development. Comparative Political Studies 48, 1526–1562.Google Scholar
Munck, GL and Verkuilen, J (2002) Conceptualizing and measuring democracy evaluating alternative indices. Comparative Political Studies 35, 5–34.Google Scholar
Nishiyama, A (2011) Economic growth and infant mortality in developing countries. European Journal of Development Research 23, 630–647.Google Scholar
Ottervik, M (2013) “Conceptualizing and Measuring State Capacity: Testing the Validity of Tax Compliance as Measure of State Capacity.” QoG Working Paper Series 2013:20.Google Scholar
Pemstein, D, Meserve, SA and Melton, J (2010) Democratic compromise: a latent variable analysis of ten measures of regime type. Political Analysis 18, 426–449.Google Scholar
Pomeranz, D (2015) No taxation without information: deterrence and self-enforcement in the value added tax. American Economic Review 105, 2539–69.Google Scholar
Profeta, P and Scabrosetti, S (2010) The Political Economy of Taxation. Cheltenham, UK: Edward Elgar.Google Scholar
Rakner, L and Gloppen, S (2003) Tax reform and democratic accountability in Sub-Saharan Africa. In van de Walle, N, Ball, N and Ramachandran, V (eds), Beyond Structural Adjustment- The Institutional Context of African Development. Houndmills: Palgrave Macmillan, pp. 76–100.Google Scholar
Riley, JC (2005) Estimates of regional and global life expectancy, 1800–2001. Population and Development Review 31, 537–543.Google Scholar
Rogers, MZ and Weller, N (2014) Income taxation and the validity of state. Journal of Public Policy 34, 183–206.Google Scholar
Ross, M (2006) Is democracy good for the poor? American Journal of Political Science 50, 860–874.Google Scholar
Sandford, CT (2000) Why Tax Systems Differ: A Comparative Study of the Political Economy of Taxation. Bath: Fiscal.Google Scholar
Scheve, KF and Stasavage, D (2010) The conscription of wealth: mass warfare and the demand for progressive taxation. International Organization 64, 529–561.Google Scholar
Sen, A (1999) Development as Freedom. Oxford: Oxford University Press.Google Scholar
Soifer, H and Vom Hau, M (2008) Unpacking the strength of the state: the utility of state infrastructural power. Studies in Comparative International Development 43, 219–30.Google Scholar
Stiglitz, JE (2010) Development-oriented tax policy. In Gordon, RH (ed.) Taxation in Developing Countries: Six Case Studies and Policy Implications. New York: Columbia University Press, pp. 11–36.Google Scholar
Swank, D (2016) The new political economy of taxation in the developing world. Review of International Political Economy 23, 185–207.Google Scholar
Tilly, C (1990) Coercion, Capital and European States, AD 990–1990. Cambridge: Basil Blackwell.Google Scholar
Timmons, JF (2010) Taxation and representation in recent history. Journal of Politics 72, 191–208.Google Scholar