Property Threats and the Politics of Anti-Statism: The Historical Roots of Contemporary Tax Systems in Latin America

Tax revenues have risen in Latin America, but differences persist in national tax burdens and public sector size. This book examines the historical roots of this variation, revealing the lasting impact of redistributive reform episodes on future taxation.

Format: Paperback / softback
Length: 332 pages
Publication date: 02 February 2023
Publisher: Cambridge University Press

Tax revenues have surged significantly across Latin America in recent decades, challenging the region's reputation for being home to states that struggle to finance economic and social development. While there have been notable improvements in tax collection, significant variations exist in the magnitude of national tax burdens and the size of the public sector, even among seemingly similar countries. This book delves into the historical roots of this disparity, examining the enduring impact of historical episodes of redistributive reform that threatened property rights. Through in-depth case studies of Argentina, Brazil, Chile, Mexico, as well as evidence from Ecuador and Guatemala, Ondetti sheds light on how these reforms have shaped the political landscape and influenced future taxation efforts.

Ironically, the areas where these episodes were most extensive have had a lasting impact on future taxation. These reforms prompted economic elites and social conservatives to mobilize politically against state intervention, leading to the formation of peak business associations, rightist parties, and other formal and informal organizations that have proven to be remarkably enduring. These organizations have worked to protect their interests and limit government interference in the economy, which has had a detrimental effect on tax collection and government spending.

Despite these challenges, there are signs of progress in Latin America. Many countries have implemented reforms aimed at increasing tax revenue, improving tax administration, and reducing corruption. These efforts have the potential to improve the region's economic prospects and reduce poverty, but they require sustained political commitment and cooperation among governments, businesses, and civil society.

In conclusion, while tax revenues have risen robustly across Latin America, significant differences persist in the magnitude of national tax burdens and the size of the public sector. Historical episodes of redistributive reform have played a significant role in shaping the political landscape and influencing future taxation efforts. However, there are opportunities for the region to overcome these challenges and improve its tax system, which is essential for promoting economic growth and reducing poverty.

ISBN-13: 9781108823456