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Tax Reforms in Latin America in an Era of Democracy

Published online by Cambridge University Press:  05 September 2022

Diego Focanti ,
Mark Hallerberg  and
Carlos Scartascini
Diego Focanti
Affiliation:
Brown University
Mark Hallerberg
Affiliation:
Hertie School of Governance
Carlos Scartascini
Affiliation:
Inter-American Development Bank
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Abstract

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When studying the politics of taxation it is important to evaluate changes to the tax code in terms of rates, bases, and exemptions instead of just revenues. With that objective in mind, we have compiled a more comprehensive database of tax reforms for Latin America. In this article, we present a description of the database as well as the stylized facts. We also explore the economic and political determinants of reform such as the role of the economic and politico-institutional variables, and compare the results to the consensus. We find two interesting results. First, determinants of reforms seem to have changed over the years as democracies have solidified. Second, disaggregating reforms in various ways is a better strategy for understanding the mechanisms behind tax reforms than looking at the overall number of reforms. Having developed an exhaustive database that allows such disaggregation we provide motivation for future research on this topic.

Resumo

Resumo

Al estudiar la economía política de los impuestos, es importante evaluar las reformas de acuerdo a los cambios legales que se hacen a las tasas, bases o exenciones, en lugar de observar únicamente cambios en la recaudación. Por ello, hemos recopilado una base de datos que incluye las reformas tributarias en todo el continente latinoamericano. En este trabajo, presentamos una descripción de la base y de los hechos estilizados que observamos. Asimismo, exploramos los determinantes económicos y políticos de las reformas tributarias, tales como diferencias en instituciones políticas y comparamos nuestros resultados con el consenso vigente. Dos resultados se destacan: en primer lugar, los determinantes de las reformas parecen haber cambiado en el tiempo a medida que las democracias se han consolidado; en segundo, en lugar de sólo comparar el número de reformas, la desagregación de la información en diferentes maneras permite entender mejor los mecanismos subyacentes. Habiendo desarrollado una base de datos que permite tal desagregación, proveemos la motivación para investigaciones futuras sobre el tema.

Type
Research Article
Information
Latin American Research Review , Volume 51 , Issue 1 , 2016 , pp. 132 - 158
Copyright
Copyright © 2016 by the Latin American Studies Association

Footnotes

The authors would like to thank the editor, three reviewers, and participants at the DC Comparative Politics and Political Economy Seminar, the seminar “The Future of Taxation” at the Inter-American Development Bank, MPSA 2012, Western Economic Association 2012, and the German Development Institute for their comments and suggestions on the overall research project. We would also like to thank Maria Franco Chuaire for her assistance with our research. The opinions expressed in this document are those of the authors and do not necessarily reflect those of the Inter-American Development Bank, its Board of Directors, or the countries they represent.

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